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- A few blocks before Bitcoin’s halving, the community and analysts still cannot reach consensus on its effect on BTC’s price performance.
- Average block size on the Bitcoin network reaches a new all-time high of 1,341 MB. Meanwhile, Bitcoin hash rates are experiencing volatility.
After months of anticipation, Bitcoin’s halving day is here. At a time of global uncertainty, halving will certainly occur when the Bitcoin network reaches block 630,000. The event occurs approximately every 4 years. At the time of publication, only 64 blocks remain until implementation. This means that the halving will occur around 8pm UTC today, May 12, 2020.
The event is important for Bitcoin and for the crypto space. After more than 10 years, and against initial forecasts and headlines that proclaim its death from time to time, Bitcoin is still here. In the face of the Federal Reserve’s “infinite money” policy, worldwide bans and the condemnation of leaders. Bitcoin remains and its monetary policy is being implemented according to its design.
When the last of those 64 blocks is reached, the miners’ rewards for validating transactions on the Bitcoin network will be halved. Therefore, the current mining reward of 12.5 BTC will be reduced to 6.25 BTC, cutting the miners’ revenue from the network on this date. In addition, reducing the issuance of Bitcoin supply.
Around this event, a number of opinions and predictions have been formed. Many personalities and analysts say that this event will be unique, due to the characteristics of the market and the current economic situation, in the history of Bitcoin. However, there is no consensus about whether the event will be bullish or bearish for the BTC. Especially after the drop in BTC’s price in the last hours.
Bitcoin network status before halving
At the time of publication, BTC is trading at $8,803 with a 2.02% loss in the last 24 hours. As mentioned, the first cryptocurrency by market capitalization has experienced high volatility in the last few days. After passing the $10,000 mark, BTC fell to $8,100 to rise to its current price. Although it still shows gains of 28.64% over the last month.
This price movement is possibly influenced by the activity of traders and investors and miners preparing for the Bitcoin halving. According to the research firm Glassnode, the number of Bitcoin whales has grown over the past few months in anticipation of the halving. In that sense, economists like Nouriel Roubini have stated that the fall of BTC is due to the lack of market regulation and the dominance of whales that can manipulate it at will.
However, it is necessary to consider that other fundamental aspects of the Bitcoin network have reached new all-time highs. For example, the average block size on the Bitcoin network increased twice during May. First, on May 2 when the blocks reached an average size of 1,341 MB and then on May 7 when the block size reached 1,312 MB, as can be seen in the following graph.
According to Blockchain.com, the average block size of Bitcoin’s network is almost double the size of the network before the 2016 halving. In addition, the network has also seen an increase in transaction confirmation fees with a peak reached on May 8. At that time, transaction confirmation fees reached a price of $3 per transaction. By comparison, the fees stood at $0.62 at the end of April this year.
On the other hand, Bitcoin’s network has also experienced an increase in its hash rate. As can be seen in the graph below, Bitcoin’s hash rate reached a new all-time high during May of this year, when the hash rate of the entire Bitcoin Network rose to 142 exahashes per second (EH/s). Throughout today, the hash rate is expected to continue to rise as miners try to take advantage of the current mining reward.
Expert opinions and price predictions
As reported by CNF, in the crypto space there are two main narratives around the halving. Bullish analysts believe that this year’s event, although with unique characteristics, will have the historical effect of other halvings. In addition, they add that a supply shock will occur that will boost Bitcoin’s price.
Among the bullish experts is Anthony “Pomp” Pompliano. Pomp believes that the Fed’s “infinite money” policy will also be a catalyst for the rise in Bitcoin prices. As the traditional financial institution prints money in an attempt to mitigate the crisis caused by the Covid-19 pandemic, Bitcoin is preparing to cut back on its supply. Among the analysts and investors who think like Pomp are Mike Novogratz and billionaire Paul Tudor Jones.
Among the pessimists is Peter Schiff. According to Shiff, halving will be a kind of collapse for Bitcoin and the crypto market. Schiff said that Bitcoin “won’t last long” and believes that investors and traders will be disappointed with the outcome of the halving. But he offered no further explanation as to why this should happen.
Willi Woo, however, said that the halving will represent a change in the Bitcoin trading. According to the analyst, the pressure to sell BTC will shift from the miners to the exchanges. This change in BTC’s trading, Woo said, will slow the increase in Bitcoin market capitalization.
