Steemit Crypto Academy Contest / S12W2 -: STEEM Vs Bitcoin halving
What an interesting week and an important topic to be discussed for this weeks crypto academy season its awesome to always connect with like minded crypto users in this decentralized chain and digress important topics in the crypto space glad to be part of this weeks crypto academy contest challenge.
Introduction to bitcoin halving
The inception of bitcoin as a decentralized digital currency aimed to give humanity freedom over the use of their asset also aimed to tackle inflation and excessive supply of fiat currencies in general there have been much printing of fiat currencies which in turn cause inflation to tackle this problem the idea of bitcoin halving which takes place every four years aims to make bitcoin more scarce by reducing it distribution supply to miners initially when bitcoin was first introduced miners gets a decent amount of bitcoin when they solve complex puzzle on blockchain blockchain these is call rewards with time this reward was reduced by half every four years.
In general Bitcoin halving refers to a specific period of time (four years) when the rewards for mining bitcoin is reduced by half thereby reducing it supply this process reduce mining reward transaction fee this process serve to control supply of bitcoin.
Image source and edited on canva
Phase of bitcoin mining history
We had the first bitcoin halving which took place in 2012 this first halving reduces bitcoin rewards to 25 bitcoin per block reward which mean when bitcoin was first introduced in 2009 block reward was 50 bitcoin per block. The next phase halving took place after 4 years which was 2016 which reduce bitcoin reward to 12.5 bitcoin per block the next was 2020 which reduce bitcoin reward to 6.25 bitcoin per block, this mean the next halving will take place in 2024 which will also reduce the current reward by half.
The above process of halving shows how bitcoin reward block is reduced by half every 4 year thereby controlling the supply of bitcoin.
With the above introduction, we can have a good clue of what bitcoin halving is all about and how the block reward for miners is reduced after every 4 years.
What could be the effect of Bitcoin halving on cryptocurrencies? Explain
From the image below we can see bitcoin dominance at 49% this means that the entire crypto market is dominated by bitcoin occupying about 50% of the total crypto market capitalization a rise or fall in bitcoin could have either positive or negative effects on the entire crypto market just as seen from the image below show bitcoin control major trading volume of all crypto.
Image source and edited on canva
Other effects of bitcoin halving on cryptocurrencies are as follow
Supply reduction; when there are few months to bitcoin halving as we have seen the previous years bull run market always kicks in this process increase demand on the price of bitcoin making it even more scarce as most holders are not willing to sell their bitcoin holdings.
Sentiment in market: every bitcoin halving gets all social platform trending the the bitcoin halving hash tag this in turn drives traffic and attract even none crypto users to be curious about buying bitcoin and therefore creates fear of missing out (FOMO) this makes people to want to buy and hold bitcoin.
Effect on altcoins; we have seen how bitcoin halving which always kick start bull run leading to high market demand of both altcoins and bitcoin in this process coins like ethereum and Solana experience good increase in price because bitcoin demand is high in the market.
Increase adoption: bitcoin halving always becomes talk on the street and all social platform this makes even those who are not into crypto to be curious about the space thereby driving more users to join the crypto space
In contrast we can see that bitcoin halving have a significant effect on the entire crypto space by increasing adoption, it also affect other altcoins to grow when bitcoin supply reduce it also creates market speculation and sentiments of bitcoin growing and accepted by other financial institutions.
How was the price of STEEM affected by the latest Bitcoin halving? Explain and show screenshots.
To properly answer the above question we need to know what time did the last halving occur, according to cointelegrah news the last bitcoin halving happen in May 2020 which make bitcoin to witness an all time high price of $69,000 in November 2021.
So from the information about we can look at price of STEEM in those years and see how bitcoin halving affected the price of steem that year.
The Images below is taken from my binance trading application, it shows a 1 day timeframe of STEEM/BTC pair.
From the images we can see during bitcoin halving in the month of May the price of STEEM make and all time high. And also in November the price of STEEM also saw a significant increase in price.
This Image below shows price of steem in May here steem was up all through the month of May 2020
The next Image is the price of steem in November 2021.
So from the two Image we cas deduce that STEEM price was affected positively the the last bitcoin having.
Make a technical analysis of the price you forecast for STEEM at the time of the Bitcoin halving. Screenshots are required.
From the image above the technical analysis indicator used is the bollinger band.
The bollinger band is basically used to indicate support and resistance of a trading pair or token the above is a STEEM/USDT 4 hour timeframe.
Between number 1 and 2 is the support and resistance of steem with the purple line is the support line where steem price seem to always bounce up when there is sell pressure while the number 2 indicates when there is much buy the price tend to bounce back.
A good thing about this indicator is it can contract and expand base on price volatility between number 3 we can see there is expansion which shows there isn't much trading activity due to bear market influence
Looking at long term with increase in trading volume and volatility there will be contraction showing much trading activity going on.
In summary the price of steem from these indicator show in long term there will be contraction leading to price of steem crossing the yellow line which is the resistance line which can trigger good price increase in the future when accompanied with bitcoin halving.
Advantages and disadvantages of the Bitcoin halving, for the cryptocurrency world.
Advantage
Price appreciation: since every bitcoin halving shows there is reduction in block reward distribution for mining reward and also result in supply reduction price of bitcoin will always appreciate when halving events occur.
Scarcity; when there is decrease in supply demand always increases this will allow users to want to hold and store bitcoin as a store of value.
Security: halving increases and enhance blockchain security by maintaining mining reward for miners
Increase adoption: with bitcoin halving events more users are exposed to the world of blockchain technology.
Support altcoins: with bitcoin halving more altcoins tend to see a significant increase in price.
Disadvantage
Mining difficulty: mining bitcoin requires good amount of money to maintain there is high cost for electricity with bitcoin halving and rewards reduce miners could go out of business.
Attract regulatory policies: since bitcoin mining involves use of energy regulators are concerned about the environmental effect of mining rigs.
High speculation: bitcoin halving tends to always cause speculation in the market which are mostly followed by hypes.
In conclusion we can see that bitcoin halving mechanism has been designed to maintain circulation supply of bitcoin it in other words help to stabilise bitcoin supply thereby reducing inflation it positive effect outweigh the negative side which means bitcoin halving is very important as it controls supply distribution it is also important to know that bitcoin halving doesn't necessarily mean a bull market will present on every halving as we have seen in some years where halving doesn't make bitcoin have an all time high price.
Greetings
Wow! a great job well presented, I wish I could have a bit of your level, I am learning and I congratulate you for that.
Bitcoin is the king of cryptocurrencies and its compaortamirnod influences the other cryptos, we hope as Steemians that our currency can rise a little and thus see the burning of tokens reflected in favor of the platform. Like everything, there are advantages and disadvantages, we wait for the next halving to see what surprise it will give us.
Thanks for sharing.
Thanks much im flattered thanks for the compliment, sure bitcoin movements majorly affect price move of other coins it interesting how halving event influence the market looking forward to better bull market next year sure steem burn is an excellent strategy to increase steem price long term.
You must be a professor with the topic at hand as you not only wrote about it, but backed all your argument with facts either pictorial or example. It was nice learning from you and I wish you all the best, not just in the contest but all through your steemit journey friend.
Thanks much friend well crypto space have been my place of adventure and exploring for many years thanks much for the warm feedback glad you find my content interesting.
Its evident to see from your work... All the best
Thanks much friend do appreciate.
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Bitcoin halving truly leads to mass adoption of cryptos. I agree that Bitcoin halving increases the prices of alt coins and this is very good.
You have also made your analysis of what the price of steem will be in the next Bitcoin halving. It will surely move upward and I can't wait for that time to come. In all, I love your presentation. It is educative. Success to you
Thanks much for stopping by and for the feedback sure bitcoin halving events always attract and increase adoption, sure wait patiently for steem to moon.
Dear, you have written nicely about bitcoin halving and steem price. Read your post to know more details about bitcoin halving. Good luck with your writing.
Thanks much for the positive feedback im glad you find this post quite useful.
Hi @mccoy02,
Very nice information, yes it takes place after every 4 years. The last halving occurred in may 2020 and I hope that the next halving will happen in 2024 which is very near and remember that it is an automatic process. Surely this havling reduces the supply which surely increases the demand.
Yes this is because of the BTC as it is the king of the crypto market. When it goes up it takes other altcoins in the upward direction and when it come down it take other crypto in the lower direction. So if the price of BTC will increase it will surely take other into an upward trend.
Thank you so much for providing a very informative article to us. I hope that article will help others to know about halving information. The pros and cons are also good. Overall a good effort my dear friend. Good luck 🤞.
Good morning from Pakistan 🇵🇰❤️
Thanks for stopping by and sharing with me definitely bitcoin halving occur every four years and no doubt we will witness another one next year i believe this will trigger another bull market, sure there is always pros and cons to anything and this event of halving is not an exception.
El éxito de BTC será el éxito de todos. Los mineros parecen que inicialmente serán lo más perjudicados con la reducción de las recompensas, ya se sabrá si el costo de minado sea sustentable. Los ganadores los poseedores del criptoactivo que verán crecer su capital notoriamente.
Saludos y éxitos.
Thanks much for the feedback sure miners are mostly affected in this event as reeards are cut which will affect maintenance of mining rigs.
Wish you all the best too my friend.
Gracias amigo por tus buenos deseos. Esperamos buenas noticias con el próximo halving.
¡Saludos y mucha suerte!
Bitcoin halving is one of the most important and interesting event that happens after every 4 year automatically because it is already stated in the white paper and if I talk about this event then really in this event supply of Bitcoin decreases but demand of Bitcoin increases which cause a significant increase in its price and due to significant increase in its price its effects on other cryptocurrency also increases
Your technical analysis for the answer of 2nd question are really appreciate able because you have clearly shown last time event of Bitcoin halving which was held in 2020 and exact date was 11th of May 2020 in which many cryptocurrencies affected positively as well as including steem also have a positive effect but there was not too much effect at that time but for now if we see predictions than Bitcoin seems to go at peak and steem is also seems to be break resistance and also seems to reach on its peak
You have also explain advantages and disadvantages of this event and overall your post it's presentation and its content is really highly appreciatable and there is nothing in it by which I did. Aayushi a lot of success in this engagement challenge and wish you good luck for your future and for all of your efforts that you made while your participation
Sure halving is a significant event that controls price of the leading digital assets bitcoin which increases demand be making bitcoin more scarce. We are all optimistic about the price of steem during the next halving event hope this will boost it price.
Thanks for your time.