The highly anticipated Bitcoin halving will take place later this year, with several analysts predicting that it could spur another cryptocurrency bull market.
Roughly every four years, or every 210,000 blocks, Bitcoin undergoes a block reward halving, which means the reward for miners who add new blocks to the Bitcoin blockchain gets cut in half.
The first halving happened in 2012. One year later, Bitcoin reached a new all-time high. The second halving came in 2016, with Bitcoin famously surging to a $20,000 all-time high in December 2017.
Cryptocurrency mining is a very energy-intensive and expensive process, with electricity, insurance, and equipment all demanding a hefty initial and ongoing cost.
Many believe that when the block reward is slashed, Bitcoin miners are incentivised to drive the price to the upside so that the industry stays profitable.
Currently, for each block a miner mines, they are rewarded with 12.5 Bitcoin. In May, this will be reduced to 6.25 Bitcoin.
According to data from Digitalik, Bitcoin is forecast to rally towards an $80,000 price point following this summer’s halving, which almost certainly means the long-awaited return of a cryptocurrency bull market.
It’s worth noting that Litecoin underwent its own block reward halving in 2019, but it didn’t have a positive impact on price.
However, leading up to the halving, Litecoin rallied by 563% over a seven-month period, which could indicate that Bitcoin will endure a similar rally before the halving this year.
From a technical perspective, a series of key resistance levels remain in the way for Bitcoin, notably $9,250 and $10,000 as well as $13,000.
A significant breakout above these levels will undoubtedly lure retail investors back in, which could be the initial signs of a Bitcoin bull market in 2020.
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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.