Steemit Crypto Academy Contest / S12W2 -: STEEM Vs Bitcoin halving
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Greetings to everyone and welcome to my engagement post for the Crypto Academy community, hope you get to learn something new as always from this week's topic of discussion. This week, we are discussing STEEM and Bitcoin halving, and how Bitcoin and the halving process affects other cryptocurrency including our beloved STEEM.
What could be the effect of Bitcoin halving on cryptocurrencies? Explain |
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Before we get to dive into the effects of Bitcoin halving, don't you think it's right for us to know what Bitcoin halving is all about? I'm sure you do, so here it is.
Bitcoin as we all know now is a cryptocurrency, whereas halving simply means sharing something into two equal parts (halves). Therefore, Bitcoin halving is an occurrence in the Bitcoin network where the reward for the successful mining of new blocks is being halved, i.e. shared into two equal halves.
This simply means that the reward Bitcoin miners receive for verifying any Bitcoin transaction is reduced to 50%, thereby reducing the amount of new Bitcoin units released into the circulation supply.
The process of halving is programmed to happen in an interval of every 210,000 blocks mined (which is roughly calculated to be every four years) and the halving process is expected to continue till the year 2140 at which it's expected to be the 32nd halving event. This is also the estimated period at which Bitcoin is expected to hit its maximum supply.
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The above table shows the initial mining reward of Bitcoin up on till 2044. The initial Bitcoin mining reward started at 50 BTC, the reward has since been reduced to 6.25 BTC (in 2020) after the third successful halving and it's expected to reduce to 3.125 BTC come the next halving predicted to be April, 2024*.
But then, how does Bitcoin halving affect other cryptocurrencies? Historically, it has been recorded that the halving of Bitcoin rewards is greeted with a bullish run among most cryptocurrencies.
Bitcoin being the grand commandant of all cryptocurrencies tends to pull strong strings around all others except the stablecoins pecked at a constant rate to that fiat currency of a certain economy e.g. the USDT and the US Dollars.
Bitcoin halving is a principle that occurs only on the Bitcoin Blockchain, so why does it influence other cryptocurrencies? Bitcoin tends to have such a pull on other cryptocurrencies because it is the benchmark for most if not all cryptocurrencies.
The halving mechanism directly affects the supply and demand dynamics of Bitcoin by decreasing the amount of new BTCs entering the market, hence, effectively reducing the available supply. With the decrease in supply, assuming demand increases or remain constant, the basic law of Demand and Supply says it will lead to an increase in price which tends to rub off on other cryptocurrencies.
Also, Bitcoin's halving usually generates improved market awareness and publicity around the cryptocurrency world. Using the expectations of lower supply and likely price increases as fuel among potential investors and traders.
This could result in higher demand for Bitcoin and other cryptocurrencies (Alternative Coins) for those who couldn't afford Bitcoin as investors and traders alike try to profit from the expected price gain.
How was the price of STEEM affected by the latest Bitcoin halving? Explain and show screenshots |
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As stated in the previous section, STEEM is part of the alternate cryptocurrencies (Altcoins), and the halving process seems to have a positive impact on the price of STEEM as seen from the previous halving on May 11th, 2020, as shown below.
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From the above screenshot, we can see that in the days leading to May 11, 2020, STEEM was experiencing a gradual price decrease.
This became a gradual increase from 7:45 p.m. on May 11 2020 at $0.1567 to $0.3198 a 16.31% increase in price at 8:10 p.m on May 20, 2020 (9 days later). However, it ended the month of May 2020 around $0.215 which opened at $0.1899 a 2.51% increase.
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This proves that the price of STEEM was affected positively by the last Bitcoin halving.
Make a technical analysis of the price you forecast for STEEM at the time of the Bitcoin halving. Screenshots are required |
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STEEM at the time of making this publication is worth $0.1502, a -3.66%, (highlighted in Red) move in the last 24 hours with a trading volume of $1,598,851 (highlighted in Green). Steem is currently ranked 277 amongst all cryptocurrencies with a market capitalization of $66,612,437, (highlighted in Yellow).
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As much as no technical analysis can predict the actual price of any cryptocurrencies correctly. We can examine moving averages, oscillators, and pivot points of STEEM/USD in other to predict the future price of STEEM.
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Using the more sophisticated tools such as the Relative Strength Index (RSI), Moving Weighted Average (MWA), and Moving Average Convergence Divergence (MACD) from the chart above, we can predict the price routines for STEEM to know the future price of STEEM.
My predicted price for STEEM at the time of the next Bitcoin halving come April 2024, is an average of $0.25 a 10% increase from todays price ($0.1502), with a trading maximum of $0.28 and a minimum of $0.22.
Advantages and disadvantages of the Bitcoin halving, for the cryptocurrency world |
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Potential advantages of Bitcoin halving include the following;
Fighting inflation:– Halving was introduced as a mechanism to combat inflation by reducing the supply of New coins to keep Bitcoin valuable and prevent devaluation.
Increased scarcity:– With Bitcoin halving as a means of reducing block rewards, it makes Bitcoin more scarce after each halving, and scarcity is intended to increase or create demand, which helps the price.
Increased Competition:- Bitcoin halving has economic effects on both Bitcoin miners as miners would need to adjust their operations to be profitable as rewards are reduced, hence increasing competition, which leads to the driving away of less productive miners.
Bitcoin halving like every other can also come with some potential disadvantages, such as:
Increased Volatility:– The process of halving can heighten volatility around the event as seen, affecting market dynamics to shift, which may restrict the mainstream adoption.
Miners Deterioration:– Since the halving process reduces miners' rewards, it can lead to a decline in the hash rate as slower miners shut down operations.
Risks of Centralization:– With the smaller miners shutting down operations, mining power may be centralized in the hands of a few large pools and industrial miners, which can be a danger to decentralization.
Delayed Price Reaction:– While records show the post-halving rise in price, be informed that this isn't always the guaranteed result. A shift in the demand and supply dynamics could take time to manifest in the valuation of an asset.
CONCLUSION |
Bitcoin halving is expected to continue reducing the rate of new Bitcoin supply until all 21 million BTC have been mined, with the final fraction of Bitcoin estimated to be around 2140. The next halving process is expected to happen around April 2024, which will result in a decrease in the mining reward for each block to 3.125 BTC. Please do well to share your feedback on this with me.
I wish to invite @yakspeace, @ninapenda, @ruthjoe, @drhira and @suboohi
Thank You for your Time
NOTE: Always have a smile on your face, as you are never fully dressed without one.
Greetings friend
I liked your participation since I see in details how Bitcoin has behaved in the reduction and how Steem reacts to this event every 4 years.
I would like to learn to read those tables or letters of cryptocurrency exchanges, I really don't understand them very much but I'm learning so I'm encouraged to participate.
Success for you.
I am more than happy to hear that you like my posts on the topic, however I will try my best to make you love it next time 😆🥰. Thank you for your support.
Thanks for sharing such a vital information pretty sure bitcoin halving is an algorithm hardcoded into bitcoin blockchain making it possible to control supply distribution of bitcoin to miners in every 4 years interval. The last bitcoin halving had a positive impact on steem price no doubt though i see bitcoin halving has good advantages when compared to it disadvantage thanks for the share.
The process of halving bitcoin is an algorithm like you have rightly said coded into the bitcoin blockchain, and executed by smart contracts after every 210,000 blocks, which is approximated to occur in about fours.
About our hopes for positive results, all we need is a positive mindset, but be ready to accept the outcome as no one can predict the future 100%, but judging by last halving outcome, I'm hopefully for a positive result coupled with the burnsteem initiative. Thank you for your time, I really appreciate your time and feedback.
Your much welcome well the crypto space can't be predictable 100% but we remain optimistic about the future of crypto and blockchain technology.
That's in indeed the whole truth. Hoping for the best outcome.
We are happy to welcome the Bitcoin halving day which will influence the increase in prices of other crypto coins. Even though there are many predictions of the 4th Halving in 2024, the BTC price will reach up to 160,000 USD, this news should not be swallowed whole so that Steem users do not "panic power down" to store all their assets in the market. It is not certain that the scarcity of bitcoin after the Halving will make the price of BTC soar to 200.000 USD.
Your description is very interesting sir, thank you.
What we need to understand about the Bitcoin having process is that the halving has to do with the mining rewards only, and not the total market supply.
It is the rewards which miners get that is being cut down 50%, meaning it only reduced the rewards for miners, just as the inflation protocols with the Steem Blockchain, hence reducing the reward users earn for carrying out the mining process.
This in turn reduces the number of tokens entering circulation so if demand is constant or even falls, hence the value will not increase, but we are just being hopeful that it will be positive.
Thank you for your time spent and such as wonderful feedback. Hopefully we get to learn from each other. Thank You...
Thank you again for your valuable input sir, I don't know much about the BTC halving, I'm just focused on the final decision after the BTC halving day where all coin prices will surge in the market due to scarcity.
I understand. The surge in price is mainly fueled by market sentiment.
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Dear, You have written very nicely about Bitcoin Halving and Steem. I am inspired by your writing and am interested in learning about this topic. I read all your posts in this community. Learned a lot and will continue to learn. Good luck with your writing.
Wow! You're giving me butterflies... I'm over the moon knowing you have so much interest in my work under in this community, I really can't thank you enough for the vote of confidence you've placed on me. Thank you, I very much appreciate.
Hi @sahmie,
Yes we saw in the past that when the halving occurred it took the price of the cryptocurrencies in the upward direction. Because halving reduce the supply and increase demand which leads BTC into an upward trend, as BTC is the king of the market we see an upward trend due to it in other cryptos.
Yes you are totally right because when the reward reduces the small miners find it harder to compete with the big miners that is why they left the mining and the big miners takes advantage of it. It also makes the mining centralized because the large miners can take advantage.
You attempted all the questions in a good way and I get a lot of knowledge from your this post. Thank you so much for sharing this informative article with us and I wish you all the best in this competition. Best of luck my friend.
Good morning from Pakistan ❤️
I am more than happy to hear that, I've helped impacted positively on your knowledge based on the topic at hand. Thank you for this heartfelt remark.
Es un buen pronóstico para el próximo halving. El halving ha sido diseñado con el propósito de controlar la inflación y el circulante. Seguramente el halving que está por llegar provocará buenos resultados con un espectacular despegue. El Steem le acompañará y nos beneficiará a todos.
Saludos y éxitos.
I am optimistic about the future of the Steem, hence my prediction coupled with the halving mechanism of bitcoin to country inflation and reduce the tokens in circulation.
Like Bitcoin, Steem has also adopted mechanism such as burnsteem and an automated mechanism to reduce its inflation, so I am optimistic it will be a positive effect again. Thank you for your time and support.
Exactamente amigo. Steemit creo que hace lo correcto con la quema para estabilizar y controlar la inflación. El halving tiene objetivos similares para el BTC y que al final termina afectando a todo el mundo critpográfico
Saludos, ¡Un fuerte abrazo!
Thank you so much friend for participating in this engagement challenge and I am happy that you explain each and every question very well and in the required way you answer them and I agree with you that after 2 ,10000 blocks mining Bitcoin halving happens automatically and in this way it's supply reduces and demand increases which in turn also increase its value and price
Last time Bitcoin halving date was exactly 2020, 11th May and at that time there will cryptocurrencies that work affected greatly due to this event but there were some also that don't show much significant effect and steem was also among of them which don't show a significant increase in its price but yes there was a little bit effect on it also
If I talk about this event which is going to be held in future and it is just after some months and most probably it is going to be happen in 2024 March so there are too much expectations about this event that it will bring a huge increase in the price of steem as you have also illustrated through your prediction in which steem seems to break its resistance. Overall you elaborated all answers very well and I wish you success in this engagement challenge
Thank you for this very contributing remarks. I agree with you that there is too much expectations around bitcoin halving, however this expectations are what creates market sentiments and as well it considered as a fundamental part of Bitcoin.