Big crypto event: “Halving” is intended to secure the value of Bitcoin. But before the time comes again on Monday evening after years, the course collapsed.
The cryptocurrency enthusiast scene is even more excited than usual. “It’s Showtime. The halving is here” and “Control your emotions,” writes a Bitcoin investor on Twitter. This Monday evening is a major event for those interested in the cryptocurrency – which for critics is nothing more than a high-tech speculation object: the so-called halving, in which the remuneration per calculated block of the currency is halved.
Because of the technical basis of Bitcoin, there are peculiarities in its creation that do not occur with traditional money or investments. In order for new Bitcoin to emerge, they have to be “mined” in complex computing operations – and with a lot of computer power. Approximately every four years, the reward (“block reward”) is halved in the form of new bitcoins for performing certain computing processes (“mining”). That means: the miners only get 6.25 bitcoins per block, before Monday evening there are still twelve bitcoins.
The halving event is firmly anchored in the program code of the cryptocurrency, it is supposed to be an automatic protection against loss of value. The halving is intended to prevent the originally set number of 21 million available bitcoins from being reached too quickly.
“Halving noticeably cuts the supply of new bitcoins,” says economist Philipp Sandner from the Frankfurt School of Finance & Management. “It would be as if all the gold mines in the world were producing only half of the gold overnight.”
It happens every 210,000 blocks
The halving always takes place after 210,000 calculated blocks. This is how Satoshi Nakamoto, the mysterious founder of Bitcoin, set out. The blocks form the so-called blockchain and form the infrastructure of the cryptocurrency.
The halving is now taking place for the third time in the history of Bitcoin. At the first halving in November 2012, the Bitcoin price was in the double-digit dollar range, the second in July 2016 at around $ 600.
Even before the halving, fans of Bitcoin are betting that the price will rise due to slower supply growth – and are therefore investing in the currency. But there are also investors who use the hype around Bitcoin to take profits from the recent price rally. In mid-March 2020, bitcoin had dropped below the $ 5000 threshold in the meantime and has grown rapidly since then.
Immediately before the halving, the price dropped significantly. After first crossing the $ 10,000 threshold on Friday night, many investors parted ways with their holdings over the weekend, causing a real crash. The weekend’s low was $ 8,520. On Monday, the price leveled off at around $ 8,700.
Strong exchange rate fluctuations are the rule rather than the exception for digital currencies. These fluctuations were particularly severe in 2017 and 2018, when Bitcoin initially rose extremely and reached its record high of $ 20,000 – only to fall at a rapid pace a little later.