The Bitcoin halving appears to be a hot topic in the latest cryptocurrency news. Since it is upcoming, the halving is happening on virtually every major cryptocurrency. But how does that actually happen?
For those of you unfamiliar with this event, the Bitcoin halving is a very popular (and much anticipated) event in which the BTC block rewards are reduced by 50%. One halving happens every four years. From an economic perspective, this process is a bullish event because it directly reduces the inflation rate of the asset with a fixed supply of $21 million.
This is the third Bitcoin halving which will happen to date – and one that will drop the annual issuance rate of Bitcoin from 3.70% down to 1.79% which is still lower than the inflation rate of many wealthy nations. For instance, the current inflation rate in the US is 1.90%.
A lot of market participants have responded by frantically buying the asset after every halving event, as the inflation rate decreases intensify demand pressure. In the first halving, the Bitcoin price rose from $12.31 at the time of the halving to around $994.21 a year later in a 7,976% rise. In the second halving, the price soared from $650 to $19,535 over a year later for a 2,902 percent surge.
Meanwhile, the altcoin news show that almost every altcoin benefits from the Bitcoin halving. If we take a look at the altcoin market cap, we can see that many cryptocurrencies benefited from the splitting of Bitcoin. Even unsurprisingly for many, a lot of cryptocurrencies enjoyed significantly higher gains compared to Bitcoin.
What’s also important to note in the coming altcoin news is the fact that the first BTC halving triggered an altcoin market cap rise from $45.89 million (June 2013) to $2.02 billion (December 2013) which was an increase of 4,302%. In the second Bitcoin halving, the altcoin market surged from $1.74 billion to an all-time high of $555.91 billion in January 2018 demonstrating a meteoric rise of more than 31,849%.
Even though there were many other reasons for the market cap increases, the Bitcoin halving is right now one of the most anticipated ones, as many best cryptocurrency news sites reported. From there, it is safe to say that BTC halvings catalyze a lot of price increases across the entire market.
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