Bitcoin price may reach $ 50,000 by the end of the year
Since the third halving, the price of MTC has increased by 9.4%
The profit of miners from the BTC commission increased by 17% after halving
International consortium of news organizations developing transparency standards.
What are the consequences of halving for the crypto world? Will bitcoin take off and how will it affect other coins? What will change in terms of mining? BeInCrypto asked analysts of EXMO cryptocurrency exchange about this.
What to expect for miners?
Given the current BTC value of $ 9,735, the reward for a new block is $ 60,843. Prior to the May 11 halving, that amount was $ 121,687. While a 50% reward reduction won’t affect the network globally, the event will seriously affect small miners. Analysts predict a 30% decrease in the number of miners due to loss of profitability. For example, mining with Antminer S9 hardware will no longer be profitable. Calculations show that miners’ revenues declined by more than 40%, from $ 16 million to $ 9 million after the reward was reduced. For small players, mining other cryptocurrencies can be profitable. Despite the lower cost of coins, the extraction of such tokens will be profitable due to simple algorithms.
The graph shows that mining profitability has dropped significantly since the third halving. If on May 9 this indicator was 0.161 (USD / day for 1 THash / s), then on May 19 it dropped to 0.095.
Despite this, the mining industry was actively developing on the eve of halving. The biggest gains in hash power can be seen in North America and Canada. This is evidenced by the increase in the bitcoin hash rate in March, when the value reached 133.29 EH / s. Active investments in mining ahead of the halving indicate that new companies are counting on an increase in the value of the asset, since even the use of new equipment risks losing profitability if the price falls..
Although in the first days after the third halving, the bitcoin hashrate did not change significantly, now we are seeing a serious drop in this indicator..
Until May 11, it was at 137.57 EH / s, and in the first 5 days after the reduction in the award, the value fell sharply to 87.1 EH / s. Thus, the hash rate dropped by more than 36%. As of May 19, 2020, this figure is 98.55 EH / s. This indicates that many miners and mining pools have begun to shut down Bitcoin mining equipment due to loss of profitability..
Block mining time
Halving Bitcoin halving cuts the number of new coins created and earned by miners in half. This happens about every four years and … More also influenced the mining time of one block. Immediately after the event, analysts reported that the production time had dropped to 7 minutes. We would like to note that usually this indicator is at the level of 10 minutes. So, as of May 9, the production time for the new block was 8.47 minutes. After an unexpected decline, the figure rose 65% as of May 17. Now we are again seeing a decrease in block mining time: on May 18, it fell to 11.25 minutes.
The indicator is expected to stabilize soon and return to normal values.
Growth in transaction fees
On the eve of the third halving, many experts said that with a decrease in the reward for mining a new block, an increase in transaction fees should also be expected. We could see a gradual increase in commission fees in the month before the event. So, in mid-April, the average commission was $ 0.39. In anticipation of the decrease in the award, the figure rose to $ 3.19. The spike came immediately after the halving, when commissions rose to $ 5.16. In this regard, the profit of miners from commissions has increased significantly and is now equivalent to 17% of total income. At the moment the indicator continues to grow and as of May 19 is $ 5.82. As the graph shows, the average transaction fee has increased by 1392% since mid-April 2020.
How halving 2020 affected the price of bitcoin?
In order to assess the impact of halving in 2020 on the further development of bitcoin, it is necessary to analyze changes in the price of an asset in the previous two times.
Prior to the reduction of the award in 2012, the price per coin was $ 12.12. At the same time, over the year it grew to $ 988.63 (+ 8057%). By the time of the second halving in 2016, the price for one BTC was $ 657.56. In July 2017, it increased to $ 2,525 (+ 283%). In December of the same year, the price of bitcoin reached an all-time high and $ 19,783 per coin. Thus, after the second halving of bitcoin, the value of the asset increased by 2908% in 1.5 years..
Despite the high volatility, the overall price of bitcoin rose after each halving. This is primarily due to:
- decrease in inflation.
- the psychological effect of limited supply;
As for the changes after the halving on May 11, 2020, it is still not possible to say with certainty what the future holds for Bitcoin. Many factors affect the value of an asset. For example, now the demand in the market is largely formed due to the economic crisis and high inflation of fiat currencies..
As you can see in the chart below, the price of bitcoin has fluctuated a lot since February 2020. The sharp decline occurred in mid-March when the asset’s value fell from $ 8,300 to $ 4,300. After that, the price gradually increased and on the eve of the third halving was at the level of $ 10,000. It fell to $ 8,900 on May 11. After the halving, the value of the asset began to gradually rise again. As of May 20, 2020, the price is $ 9,735. Thus, if we estimate the price changes since the halving, then it increased by 9.4%.
Despite the fact that in the first 2 days after the reduction of the reward for the production of a new block to 6.25 BTC, a decrease in volatility was expected, now the price is subject to constant fluctuations.
After the first halving in 2012, volatility decreased for the first time, and then increased markedly. The same trend was observed after the second halving: the decline occurred before the sharp rise in price in December 2017. As for the impact of the third decrease in the block mining reward, so far we are seeing an increase in the level of volatility. If before May 11 the value was 3.05%, then as of May 17 this figure is 4.01%.
Many analysts are confident that, as after the first two halvings in 2012 and 2016, the value of the asset will grow. Amid the global economic crisis due to the quarantine due to the COVID-19 pandemic and the instability of the oil market, interest in cryptocurrencies will increase. The bold forecasts are that the bitcoin price will rise to $ 50,000 by the end of the year. Some analysts are convinced that by 2022-2023 it will reach $ 250,000.
It is not yet possible to say with certainty what the future holds for bitcoin and altcoins, since the cryptocurrency market is volatile. Many analysts expect Bitcoin to rise based on the scenario of two previous halvings in 2012 and 2016. The price of the main cryptocurrency is predicted to reach $ 50,000 by the end of this year. In addition, the global economic crisis due to quarantine and the instability of the oil market may increase the demand for cryptocurrencies..
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