Can Making a Digital Coin Less Mean More?
If you are looking at an asset in any market, if there is less available due to processes like halving, the value increases. Consequently, this is the age-old Supply and Demand principle. Digital coins like Bitcoin use halving as a regular occurrence to do just that. These events happen every 4 years or whenever 210,000 blocks are mined and are highly anticipated by investors. The process will complete once 32 of these events have occurred, and Bitcoin has reached its maximum supply of 21 million.
Decreasing the digital coins by half is a pre-determined code built into the creation and cannot be modified. Because of this, many users can predict the next event, which has been expected to happen around May 2020. In the past 2 halving events, in 2012 and 2016, each time the percentage of Bitcoin’s value jumped by 12-13,000%. With numbers like these, it’s no wonder investors are looking forward to the next halving in May.
Why Use the Halving Process?
Besides having a pre-determined code built into the digital structure of the coin, there are other reasons for halving investments:
1. Can encourage users to save their digital coins rather than spend them and forcing these investments to gain value.
2. Could ensure the distribution of coins more quickly for potential investors to create a conscious demand.
3. History has shown price increases in the weeks before and after halving events.
4. Ideally, if supply is decreased and demand stays continuous, prices increase making the most of investments.
Can the Financial Forecasts Be Accurate?
Seasoned investors with previous experience in the past halving events can tell you stories of the drastic market changes. Increases like 12 or 13,000% after a procedure like this can make the investing look too good to be true. However, this may not always be the case, and investors will have to be careful not to rely on previous projections.
The digital financial market is volatile and with that comes unexpected ups and downs. With any market changes, there will be winners and losers no matter which digital currency you are dabbling in. Even with this knowledge, investors are still looking forward to the next halving event coming this year with anticipation.
Staying Positive in Today’s Changing Financial Market
Cryptocurrency markets fluctuate continuously and lately investors need to follow more closely to ensure their portfolios are secure. Even more, with the news of global pandemics and emphasis on debt, investors need to be hypervigilant with market changes. Staying on top of cryptocurrency news, like halving events, will benefit both beginner and seasoned investors to protect their portfolios.
What goes down, must come up, and that is the benefit of immersing in cryptocurrencies. If your investments are low today, they could be higher tomorrow; time is on your side. Financial markets are not a Get Rich Quick scheme, but rather a way to explore how to maximize your investments. If you have the time, exploring the halving options for your own portfolio could be more than just beneficial.