I don't see anyone else stating this yet, but it's important to realize the immediate impact of a halving.
For miners, (irrespective of whether it's a company, a mining warehouse, a hobby miner, etc) some portion X of the bitcoin mined are held, and some portion Y enters circulation. Most hobby miners likely hodl much more than they liquidate, but most mining operations don't have the luxury to hodl so a significant portion (if not majority) of their BTC is liquidated / enters circulation.
This Y makes up a substantial portion of the supply in the market. Right now, there are buyers and sellers of BTC, and those transactions (according to CMC) have a recent 24hr volume of roughly $4B.
Upon halving, instantly, miners who are used to selling Y proportion of 12.5 BTC to cover their cost now only have 6.75 BTC to sell to cover those same costs. IF prices remain constant, their revenue literally just got cut in half, and likely MANY will have to stop mining because they are not going to be able to pay their power bills. But,,,, keep in mind I said "if prices remain constant".
The other side of the equation is buy-side pressure. We have $4B daily that buyers are willing to put into the BTC market. Presumably, the halving doesn't magically make these people stop wanting BTC for whatever they're using it for, there is still $4B worth of demand. While TOTAL supply has not changed, and that fact is arguably "priced in", liquid supply, generated supply, circulating supply, is reduced instantly.
So when we sum up all of the Y's, the new BTC acting as liquid supply that people are not hodling, that supply is going to shrink, and if demand remains the same, price will rise due to the immediate scarcity in the liquid "actively" circulating supply (not being hodled).
I think we will see price rising before the halving. I think we will see a spike before / during / maybe soon after. Followed by cashing out of everyone who bought before the spike to make a quick buck so we'll see price come way back down. But overall, the net effect will be a significant price increase over time.
To an extent, yes, it's "priced in", but the fact that there are 50+ comments on this thread and a lot of people have no idea what the halving is or how it has any impact, at least for those people it's not priced in at all.
Right. And I don't think there's any good reason that demand should decrease. Why would it? I mean there's the normal market changes due to whatever, but there is no explicit reason that the halving explicitly causes a decrease in demand. So assuming everything goes the way it's going, demand will remain the same, and the halving WILL drive up price.
It's priced in to a degree. The closer we get to that day, the more it gets priced in.
What's going to be really interesting this time around is the effect of the futures market. I'm not sure if it's going to make it more or less volatile, but one of the best use cases for the futures market is miners using it to make their income more predictable. That's not going to work if their income is going to literally drop by half at a single moment that everyone can see coming....unless the futures start to push that effect further back into the past.
It remains my firm belief that the price to mine per BTC is the strongest price support level there is, and prices can not plausibly drop far below that level for a long period of time. The way I see it, the closer the price of BTC is to the marginal cost to mine, the bigger the effect of the halvening.
> one of the best use cases for the futures market is miners using it to make their income more predictable
Yeah, this is a very good use case without a doubt.
> That's not going to work if their income is going to literally drop by half at a single moment that everyone can see coming
Yeah, I don't see this happening but without having things priced in BTC it certainly could. If this occurs, it'll be a major setback. I think hash power will actually drop because it really is unprofitable and that may send BTC into a tailspin and much lower prices. Of course, the market will even this stuff out.
IMO it's a matter of where we are with adoption by that point. Genuinely, if I could buy my groceries with BTC, I would go to the trouble of moving fiat to BTC to buy groceries, same if I could buy AMZN purchases, petrol, and other living expenses, utilities, home loans. But I can't.
> It remains my firm belief that the price to mine per BTC is the strongest price support level there is
Yes. I think this is clear. And that creates the aforementioned problem if we dip below for a while. Miners will shut off, and tailspin ensues, IMO. It'll be a slow road to recover, but of course I believe it would. Even if people are unsure of it, and even if it's not adopted yet, it is better money plain and simple so it will take over completely it's just a matter of time.
I don’t expect the day itself to be significant outside of an emotional reaction, because the only reasonable way for a miner to react is to price in the expected lower income months in advance and treat it statistically.
If anything we may see a significant increase in hashrate prior, as people race to get in before the block reward drops. With hashrate rising and increasing the security of the network at the same time as the inflation level cuts in half, the only way the price can go is up.
If the cost of mining truly is a price floor, we should see the price rising in anticipation of the higher floor the closer we get. There simply has never been a sustained period of time where profitability is so low that a large number of miners are unprofitable. Not to say it can’t happen, but there are strong reasons to believe it shouldn’t. But at this point bitcoin mining is so industrialized that it would be highly unusual to build a large business that you expect to shut down on a specific date.
I was around for the last halvening and it was pretty much a complete non-event.
\> I don’t expect the day itself to be significant outside of an emotional reaction
Yes, of course. There is a lag before the minted halved bitcoin can even possibly hit the market, and the market largely will already be gearing up for it months in advance.
\> If anything we may see a significant increase in hashrate prior
I don't really agree that we'd see this. I think that anyone with miners where it's possible to make a profit have them turned on, so there isn't much idle hashpower to be added to the network. If there is an increase, it'll be organic and it'll be because asic producers have shipped new lots, irrespective of the halving.
I think we're in agreement though. Now is the time to buy.
Right, but they’ll have shipped new lots and increased supply because demand will increase prior to the halvening. It absolutely has to given that the value of a block pre-halvening is literally twice as big. It’s like the purest expression of time is money.
Everything around Bitcoin has a healthy amount of manipulation and noise around it including a halving. The signal that less Bitcoin is truly going to be produced over time may take a month or a year or in the case of smaller and smaller halvings many years, but it does eventually get through to the market. Hopefully you'll be hodling through it all.
Think of it this way.... BTC has some characteristics similar to a commodity.
Now, what are commodities? Commodities are agricultural products... like coffee that you had for breakfast... wheat, which is used to make bread... pork bellies, which is used to make bacon, which you might find in a 'bacon, lettuce and tomato' sandwich.
And then there are other commodities, like frozen orange juice... and gold. Though, of course, gold doesn't grow on trees like oranges.
Clear so far?
Now imagine if, say, a big freeze hurts the production of oranges, and suddenly there was 50% less orange production. The price of oranges would increase dramatically.
With bitcoin, it's a bit different, because everyone already _knows_ the date of the "big freeze", so the effect tends to be more muted and more drawn out over time... but it is still there.
Miners receive bitcoin for securing the network. Currently every 10 mintues (average) one miner gets 12.5 BTC.
After the halvening, they will receive only 6.25 BTC every 10 minutes.
This has historically pushed bitcoin price up considerably when it's happened before.
Edit: HAHA, somebody downvoted this post.
Btc prices aren't based on actual scarcity its based on speculation. I bought in 4 years ago and the price I was willing to pay had absolutely nothing to do with the scarcity of BTC. You guys need to be real, bitcoin mau double this year but it will have nothing to do with scarcity or the value of the block chain, it will be due to random speculation thats why hold.
Of course, I just randomly speculated a random pretty mortar brick I found will be worth millions tomorrow. These guys thinks scarcity plays any role in pricing, I'll pay the dinner in the best restaurant of my town carrying my bricks in my pushcart.
I'd suggest not to look what happened in the past too much cos each time has its rules. Now it will be very difficult for BTC to rally 50x like it did btw 2015 - 2018. Few reasons for that :
1. Much more cash needs to be injected into BTC. I am not mathematical but 50x 5k = 250k / BTC x 17mln coins = 4.250 bln $ of the BTC cap.
2. BTC Is limited but plenty of other coins that do the same are not. You’ll see some projects growing to the next 100 bln cap in 1-2 years as well
There is this saying even a Baobab stops growing . While I do agree that BTC has the potential to grow yet 10-20 times , I find it unlikely to see BTC at 250k for the reasons above. Apple’s share won’t got to 10 trillion cap, the same way the real estate is in stagnation state in Europe since around 2000. I can think of 1 case scenario only when BTC can quick go to even 1mln. It’s the dollar and EUR collapse . In that case I see little choice left except BTC and crypto in general and we may see injection of 100bln $ into crypto. Then yes as people will have no other choice. Is not going to be buy for 1$ to sell 10$ but buy not to lose your 1$, but I don’t see another scenario .
It is 'priced in' - I've been through the past TWO and very little happened.
A comment further up mentioned about the bear market but that in itself had little to do with the halving.
One of the best properties of Bitcoin is the known supply, we know theres an average of 1 block per 10 minutes, we know the block 'cap', we know the total ever supply of coins, and we know the rules around the halvening itself.
It's very easy to predict and know the supply of coins at any point in time, be in 10 days or 10 years.
Just looking at the last 10 blocks, the block reward is 80k whilst the fee reward is only 1k.
This has an huge impact in the profitability of mining, but not the price.
It's also easy to see the role fees play in regards to the price of a token.
Basically we already know.
The day of the halvening is the most boring of all, the preceding months though aren't. At the halvening, everyone thinks it's already priced in and nothing happens. The next one will be interesting because fiat currency targets at 2% annual inflation while Bitcoin will have a little less than that and for sure because we measure the increase in supply instead of the rise of the prices after a QE.
Just to build on your comment:
The price roughly doubled over a couple days before the halvening happened, then, post-halvening, it fell back down to about the level it was at before.
Then it slowly built, and went on an insane bull run as supply and demand balanced out.
Well, I went back and had a closer look, and you're right, but you're also a cunt for being too lazy to link the chart or provide any kind of evidence.
Halvening happened July 9, 2016.
Looks like price went from 450 US 6 weeks before halvning, to 750 US a couple weeks before halvening, then dropped to 650 for halvening, and bottomed at 550 US after halvening before starting the long bull run trend up to 20,000 US, with a correction from 1200 to 800 along the way.
1: When the truck hit that guy what happened?
2: HE FUCKING EXPLODED MAN
3: No he didn't, the truck was going 2mph, he was fine, then six months later stood on a land mine
2: Oh right because there's no such thing as lag. Do you have an internal debate? That might help.
Yes the halfening helped, but the price didn't immedietly rocket the fuck up and set us soaring on a trail blazing ride to orions belt. The day its self was fairly calm from what I remember.
Right now we’re at ~3.5% inflation. It will be less than half that in about 600 days. This is what people mean when they’re talking about bitcoin’s rarity. When any other commodity becomes more rare due to reduced supply, the price rises and so then the supply increases as a reacting to the increased price.
Bitcoin doesn’t work that way. The inflation is fixed. We know what it will be next month and 25 years from now, no matter what the price does. As long as people continue to find bitcoin useful, it seems likely it’s going to soar in value for this reason.
Yes but you cant factor in stupidity. There may be a known finite amount of coins being mined at x date, but how many of them are available? ie. how many are in someone's wallet who is alive and has access to them?
No getting those coins back if i accidentally send 100 BTC into the ether because of a typo.
>The inflation is fixed
Unless someone figured out a way to add billions of bitcoins to the ledger somehow.
But that would never happen, because if it did we would just change it to remove them again, because the ledger is immutable which means it can always be changed if there's an exploit found.
No code is written perfectly from the start, that's what updates are for. The network forked to fix a bug and this is the only case of a vulnerability ever being exploited. bear in mind that 1 BTC was worth about 10 cents in August 2010, and now 60000 times that.
People are trying a lot harder to find exploits now than they were in 2010, and no more have been found.... yet.
First, I had forgotten about the overflow bug - so, fair point.
That said, from my memory of the time, the Ethereum fork is significantly different. There was blacklisting for the 'hacked' funds, and whitelisting for 'refund' funds, no?
Regardless, the Bitcoin fork didn't blacklist or whitelist specific coins/outputs, it created new rules that orphaned the 'offending' blocks, essentially creating a competing chain.
I'm sarcastically anticipating the response to "what if someone hacks bitcoin and adds a bunch of coins to the ledger?", which has already happened.
Bitcoin is the first currency to exist in quantum-superposition (which is why quantum computing isn't a threat), its simultaneously impossible for anyone to change the ledger, but also completely secure from the possibility of a hack because we can just change the ledger if it happens.
It is actually
Block reward halves every 210000 blocks
The next halving is at block 630000, we are currently at block 537955
630000 - 537955 = 92045 blocks till the next halvening
Estimated 10 Minutes a block is 920450 minutes
920450 / 60 / 24 = ~639 days
The fact is that historically, the average block is mined in less than 10 minutes. I think the average for the last 6 months is 9.2 minutes. That is why this site has a different halving day, because it uses the historical time per block, rather than the theoretical.
Yes, this means that miner's profits are squeezing. It is unreasonable to think that, if the price remains constant, hashrate doubles or triples from the current level, thus, this halvening timing is wrong. Of course miners won't double their machinery all at once with the volatility the price has, so, it is expected that they grow it slowly as they can until revenue matches costs. This is what is happening, the year started with a 19% difficult jump but now we see it around 6%.
May be there is a subtle relation if you are thinking in terms of price. Halving probably should shot the price up while tether blowing up will make the market crash (if other stable coins don't take over). Now it'll be interesting to see which one of these happens first
A top 10 crypto turns out to be an outright scam, that should boost up the market confidence you think? And shorters only need a bad news to choke btc and this will be the worst news if people find out 10 billion dollars in the cmc is just air pumped into the market cap. You'll probably think people will rush to convert all tether to btc so that should push btc up but why would anyone sell their btc to tether that moment if they have time to cancel their sell orders. Btc will crash against real usd pairings. People would also use tusd/usdt pairings, instead of tethering out with btc/usdt, they will use btc/tusd and btc/dai to "tether out". It'll be chaos. Whales will be like "chaos is a ladder".
Yes, it probably would be bad for confidence. However, it's not self evident, which force prevails. People selling for USD or people trying to get their money out of (now insolvent) USDT-denominated exchanges by buying BTC.
But we probably won't see it, because like it or not, USDT is not such a bad thing. They are actually just as solvent and liquid as any other bank. Do they have physical cash laying around somewhere in a deep underground bunker? No. But no other bank does either. They, just like almost everybody else, have bank accounts which are as backed or unbacked as any other bank account.
All the Tether FUD can equally well, if not better, be applied to any other bank.
See the problem we have with fiat is they just print it whenever they think it's necessary, it devalues the currency. Tether has the same issue, because it's (probably) not backed physically, they create tether outta thin air and push it into crypto market and there by Inflating the market cap. If this is true, it's very bad. They print tether whenever they want and fuck with btc and the entire market. I like the way you compared tether with fiat, that's exactly my point, bitcoin is trying to cure what is wrong with the fiat and tether is basically "digital fiat" if you will.
> See the problem we have with fiat is they just print it whenever they think it's necessary, it devalues the currency. Tether has the same issue, because it's (probably) not backed physically, they create tether outta thin air and push it into crypto market and there by Inflating the market cap.
That's actually not true. Tether has been audited and they are fully backed with USD.
*Can* the company produce USDT out of thin air? Sure.
But guess what, Kraken can also just add thin-air USD into their system.
Here's what's really weird: the only difference between USDT-tokens and USD-balances in centralized exchanges like Kraken or Coinbase, is that USDT are on the Bitcoin blockchain. Yet, everybody is losing their minds over USDT.
You either way trust the company, that they obey the law and don't just add USD balances that they never received.
And so far, the only company that has been audited, is Tether.
Again bro, **IF** tether blows up, market will crash and that too only **IF** it is not replaced by any other stable coin at that time. That was my original view. I'm worried about tether because I haven't heard about the audits and I only hear FUDs about tether. I hope everything is right because I don't margin trade and I don't feel comfortable tethering out so market crash is the last thing I want. But I'd rather have the tether cloud cleared either it comes out completely legit or it turns out to be scam, either way I just want this whole tether scenario to be sorted out before the next bull run.
Thanks. Just added it to my bookmarks.
It is interesting to think of how much inflation there is in bitcoin yet the price is so stable. 11k USD enters bitcoin each day just to keep the price (in USD) stable. crazy.
It's a clock that shows when the reward miners get gets halved... miners get rewarded 12.5 bitcoins around every 10 minutes to whoever finds a block .... in July 2020 the miners will get 6.25 bitcoins for reward meaning that less BITCOINs will be coming in the market to sell ...less bitcoin more demand
Generally speaking a decrease in supply results in an increase in price... but it's not a sure thing. Sometimes the market *expects* the price to increase so everybody buys up ahead of time... and then the price doesn't increase and people panic so it drops. Hard to say.
That being said, the last halvening was in June of 2016 and what began this whole run up we're in right now.
From my last halving the price rose from like $250 to $400 at the time when the reward halved and everyone was saying that the $400 price of bitcoin was already priced in since everyone knew about that there would be less bitcoin available to sell.. but a month or 2 later price kept on going up and up ...so I see another price increase in the next halvening.
You can find some outdated miners on ebay if you want to start learning about it before making a significant investment.
The most important thing to bear in miners is that they run hot. Several fires have started due to BTC miners. Speak with your parents before running one and ask them before turning it on. You don't want to be the kid who burned down his/her parents house.
Thanks man, another quick thing? I diversified my portfolio at 13% bitcoin and the 87% of it on ltc? Idk if I should make my portfolio 50 50? I think ltc has a good potential as well. Thanks
Any feed back is appreciated
I keep my portfolio balanced so I own not an equal dollar amount, but an equal percentage of the max coins.
So, a one in a millionth share of bitcoin is 2.1 coins. A one in a millionth share of Litecoin is 8.4 coins. A 1/4 ratio.
The dollar amounts will vary widely, but if you keep your crypto currency holdings stable compared to each other, well, that's good diversification in my book...
Also, the other advice is sound... BTC and LTC trend very closely together... they both go up and down at nearly the same time. Diversifying across at least one more crypto will decrease your risk.
Good luck, and don't put in more than you can afford to lose.
I dont think anybody will exactly know, but as /u/oh_here_we mentioned, Litecoin (as many other) follows Bitcoin really close.. so you may want to check other altcoins for low value but that can spike in a biggest percent. But dont go crazy, you can reserve 5-10% of your portfolio to "these games". If your intention is to hold.. I think is always good to go to safer coins :)
The good thing about these other altcoins, is that they can be easier to mine (I noticed you asked about that as well) and you wont need special equipment (at least to start...) since they dont need ASIC CPU.
I know this is "bitcoin" sub, but I recommend you to check monero/vertcoin to see how to mine them (I read something about "1 click miner" for vertcoin, which sounds like a good start, even if you dont get profits, at least makes the start easier) and that way you will learn more ways to use blockchain technologies.. and who knows if getting some profit :P
If you are still thinking about bitcoin mining, check https://www.reddit.com/r/BitcoinTechnology but is expensive and please be careful, as far as I know, they are not "user friendly"...
Remember that this is just the beginning... Bitcoin and other coins can go south and disappear, who knows.. but Im 99% sure blockchain technology will survive and be use to thousand of other applications.
Microsoft, Oracle, IBM, Samsung... all big companies are checking very closely the crypto world and some of them will apply to their products (they have their own teams and even applications in development based on them).
It doesn't mean they will get attached to any of the current coins.. but Im sure they will put in use some of the created protocols, so anything you learn now, can help you in the future (if you like the technology, of course)
We're in such uncharted waters it's really impossible to say. A lot of us here in this sub tend to think BTC is on the best track but... nobody really knows.
That being said, I don't know of many people who would consider LTC to be a *bad* investment. From what I understand it's basically a BTC clone so if the BTC network crashes and burns LTC will likely be the second mouse so to speak.
Ultimately you just gotta research as best you can and draw your own conclusions.