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Bitcoin Block Reward Halving and Its Impact on the Price

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Around July 13, 2016, the Bitcoin block mining reward will decrease from 25 to 12.5 coins. This event occurs every 210,000 blocks (roughly 4 years). The reason behind this is to control inflation, 21 million coins is the total supply of bitcoins that will be mined with about 15,366,400 BTC currently in circulation.

The Block halving has many worry and many celebrating. Although each to their own the majority of consumers are wondering what the impact the halving will have on the market. Whilst miners are likely to see their activities become more profitable, the majority of traders and consumers may actually be negatively affected by the price halving in contrary to popular belief.

Many assume a halving in block value will result in a proportional double of value. Whilst simple economics dictates that restricting demand or a slump in demand will lead to an increase in value, the nature of the Bitcoin market may mean that initially the price is stable with a rise expected after a few months. Considering the stable nature of Bitcoin prices at the moment hovering around the $410-$420 price range the halving will have a long lasting effect which may not be visible in the short term.

Considering that the majority of Bitcoins to ever exist have already been mined a halving at this stage may not be as significant as it is made out to be. However don’t let this put you down as a halving will definitely bring growth in the long term which is significantly better than many of the short term bubbles we have been experiencing in the past.

Speculation/Advice:
It would be a good idea to slowly start accumulating Bitcoins over a long period of time as there is still a considerable amount of time left to gather a sizeable balance ready for the halving period. It wouldn’t be advisable to start trading now as the price volatility will make profits small unless you have a large trading balance. However it would be advisable to divest from Bitcoin into various other cryptocurrencies such as Ethereum – ETH which is currently gaining momentum as the second currency behind Bitcoin. Always remember to trade safely and never spend more than you can afford to lose.

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