Lots of Action but No Bull Rally: Here’s How the Bitcoin Halving Went Down

Bitcoin’s (BTC) third block halving has finally taken place. The year’s most talked-about crypto event happened at 3:23 p.m. EST on Monday, May 11, as block number 630,000 was successfully mined.

The Bitcoin block reward has now gone down from 12.5 BTC to 6.25 BTC, which will likely have many repercussions on the industry. But here’s how the historic event went down.

Bitcoin halving 101

First, the definition of Bitcoin's halving states that every four years producing BTC becomes more difficult, as block rewards get cut in half by a precoded blockchain protocol. As a result, miners begin receiving 50% less BTC for verifying transactions.

This was coded in as a deflationary measure and happens because Bitcoin’s supply is limited: Once 21 million coins are generated, the network will stop producing more. Thus, the halving regulates the supply by delaying the moment that all 21 million coins (Bitcoin’s total cap) get into the market. Currently, about 18.3 million BTC has been mined, which is roughly 85% of the total cap.

The final block contained a message

F2Pool, the miner responsible for the extraction of block 629,999, printed a New York Times headline onto the blockchain just before the halving occurred. Titled “NYTimes 09/Apr/2020 With $2.3T Injection, Fed's Plan Far Exceeds 2008 Rescue,” the transaction referenced a New York Times article by Jeanna Smialek and Peter Eavis that compares the current financial crisis to the 2008 collapse, the time when Satoshi Nakamoto published the original Bitcoin white paper.

“During times of inflation, the key to preserve wealth is to hold real assets,” Kristin Boggiano, a co-founder of the Digital Asset Regulatory and Legal Alliance, told Cointelegraph. She elaborated: “Bitcoin is inherently a store of value because by its design it cannot exceed 21 million, and therefore it’s a natural hedge to an inflationary dollar.”

There was no rally, but all eyes are still on the price

The halving day itself went uneventfully for Bitcoin’s price, which stayed around the $8,500–$8,700 mark throughout Monday. That confirmed the assumption that the halving event was already “priced in,” which was shared by a substantial part of cryptocurrency commentators. Nonetheless, crypto Twitter celebrated the event in full force. 

Data from The Tie, a data provider for digital assets, showed that yesterday, tweets from cryptocurrency-related accounts saw a spike in keyword mentions for the halving and Bitcoin. As the firm’s CEO, Joshua Frank, told Cointelegraph, conversations on Bitcoin grew by 72% compared to the 30-day moving average, while Bitcoin surpassed 50,000 daily tweets for the first time since June 2019.

Indeed, the idea that Bitcoin would become more scarce has aroused the public’s interest, as Google searches for “Bitcoin halving” hit an all-time high earlier this month, exceeding the surge associated with the previous halving event by as much as 350%.

Crypto services are also witnessing a surge in new registrations, as recently revealed by Binance CEO Changpeng Zhao. According to Zhao, the level of renewed interest could be compared to the peak of the 2017 bull run.

YouTube busts Cointelegraph’s party

Cointelegraph was also celebrating the momentous happening by holding a seven-hour livestream featuring prominent industry figures such as Tim Draper, Roger Ver and Meltem Demirors.

However, as the party was coming to a close, it was suddenly interrupted by YouTube. The viewing platform deemed the livestream to be “harmful content” for an unknown reason, once again highlighting the censorship problem that affects practically all crypto-related content on YouTube.

More than 2,000 Cointelegraph viewers were locked out of our coverage as a result, with the livestream having amassed more than 124,000 views by that time. The situation is still unclear, and more updates will follow.

Bull or bear? Experts’ opinions on what’s next are divided

So, where does Bitcoin’s price move from here? That is arguably the most popular halving-related question right now, and there is no straight answer to that. Still, the price of BTC has been seeing a lot of positive action lately, which has likely been influenced by the halving event — at least in part.

Since bleeding by nearly 50% on the so-called “Black Thursday” exactly two months ago, Bitcoin has bounced back to the $8,800 mark and even briefly traded above $10,000 at the start of May. Nonetheless, once the rejection of $10,200 became apparent on Sunday, one day before the halving, Bitcoin’s price fell by 20%. It has stayed around the same level since, albeit a minor correction of 5%.

As for where the price is headed next, traders remain divided, as the latest analysis by Cointelegraph shows. Some experts believe that Bitcoin could soon see an upswing to the $14,000–$15,000 resistance area, while others suggest that a pullback to the $6,000 region is also a likely scenario in the short term.

Hash rate is expected to go down but rebound

Another important aspect affected by the halving is Bitcoin’s mining hash rate, or the amount of computing power miners are using to validate the blockchain. Like Bitcoin’s price, the hash rate has been seeing major volatility ahead of the halving, reaching an all-time high and then swinging down. As for now, experts predict the hash rate will go down. As Marc Fresa, the founder of United States-based Asic.to — a company that specializes in producing firmware for mining machines — previously told Cointelegraph:

“You can expect the hashrate to decrease as profitability for miners across the board are slashed. This result will cause the older generation miners to be unplugged unless they can find a new home with extremely cheap or free power.”

Indeed, many unprofitable miners have already left the network due to the decreased block reward, as Alejandro De La Torre — the vice president of major mining pool Poolin — said in a Monday interview with Cointelegraph, predicting that up to 30% of the hash rate could be lost as a result. 

However, the situation is likely to change for the better once the new generation of ASIC units is shipped out later this month, as the new machines have been designed with post-halving conditions in mind. “Just give it a little bit of time and the hashrate will be at a new all-time high,” Fresa told Cointelegraph.