Main Differences Between the Halving in 2016 and 2020
Bitcoin is one of the most impactful innovations of our time. It has become a valuable and huge cryptocurrency that has enormous success in the last year. As its price increased over 500% by April 2021, it eventually peaked at $60,000.
So, it’s understandable that it is one of the hot topics in 2021. A lot of experts account for the last halving as the event that triggered Bitcoin’s bull cycle. But, what is the difference between the last halving and the halving in 2016? Here we explore the main differences between the two events.
Bitcoin Halving Definition
Bitcoin halving is associated with the mining process. Mining is basically the process when the miners add and approve blocks of transactions in the network. In order to verify the BTC transactions, they need to solve computational problems while they work on high-end computer systems and invest a lot of time and electric energy.
Hence, they receive appropriate reimbursement for their work in the form of block rewards and transaction fees. The halving event is the protocol of the blockchain that splits in half this block reward when 210,000 blocks are added to the network.
Overall, the event is important for two reasons. First, it keeps the inflation rate of Bitcoin under control. Secondly, it decreases the rate at which new BTC is created by the miners on the network, and it minimizes the value of the block reward.
When it comes to the block rewards, the first reward was capped at 50 BTC when Bitcoin was originally created in 2009. This turn of events created a favorable position of the price of Bitcoin because after each halving investors a noted bull cycle.
In 2016, the block reward was 12.5 BTC. Then, the price surged from $576 to $650, and the next year it achieved its first important milestone of a price over $19,000 by the end of 2017. This bull market phase was supported by the investors who were familiar with the advantages of a BTC.
Moreover, in 2020 not only is there a huge number of trading sites, but also automated trading sites like Bitcoin Digital that are powered by high-end artificial intelligence technology that automatically trades for its members. This increases the convenience and accessibility of trading because it is not as important for the members to have extensive knowledge about cryptocurrencies in order to trade with an automated trading system. That said, on the exchange site, there is a great guide to help you trade live.
The Surge of BTC Investments
Another difference between the halving of 2016 and 2020 is the fact that by 2020 there was a great audience of institutional and retail investors that were supporting Bitcoin, as well as the companies that were accepting BTC payments. This pushed the bull cycle BTC after the halving as the demand was obviously overreaching the supply.
Hence the price of BTC in a year increased by over 300%. It went from approximately $9,500 in May 2020, after the halving, to a price of over $20,000 by December after a continual surge of the price. In 2021 the effects of the sharing and the bull cycle were still evident as the price of Bitcoin doubled in just a month and increased over $40,000 in January, and by March, it had increased over $60,000.
In conclusion, the rising demand for BTC is the main fuel to the growing price of Bitcoin and this bull cycle. In 2016 although Bitcoin was gaining traction, it was not as popular as it was in 2020, four years later after that halving. In other words, the ratio of the supply and demand is what makes one bull cycle more valuable than the other.