What can happen after halving? Four possible scenarios
|Marek Feder|source|675x
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What can happen after halving? Four possible scenarios

Bitcoin halving is one of the most important events in the cryptocurrency world, so people are trying to predict what will happen after it. CoinShare looked at the situations that could happen after halving and ranked them not only by probability but also divided them into positive and negative for Bitcoin.

The first and probably most likely possibility is that Bitcoin will rise in price, as was the case after the previous halvings. The years 2013 and 2017 (post-halving years) were the most profitable in terms of cryptocurrencies. The same is expected to happen in 2021. It is also positive news for all cryptocurrency fans, not only due to price increase but also due to the wider adoption of cryptocurrencies and media boom caused by halving.

The second, still a quite probable possibility is that the halving and the following weeks and months will not bring any change at all. Daily volatility will be on average at 2-3% as it is now, but neither significant growth nor decline is expected.

The third possibility, which already seems unlikely, is that halving, and in particular the high costs of mining, will force the miners to sell their bitcoins or stop mining them altogether. This is certainly not positive news, but the situation could be even worse if traders decide to seize their profits and sell Bitcoin at the same time. This pressure from the bears could be so severe that it would cause a relatively strong outflow of funding from the most famous cryptocurrency, thus significantly slowing its price down.

Yet another situation that may occur is the so-called mining spiral. This occurs when a large proportion of miners decide to stop mining after halving as the reward is reduced. This can cause the entire network to crash (lowered hashrate), increasing block processing time to several hours (instead of the current 10 minutes) and causing the network to be inefficient, bringing the price of Bitcoin to zero. Fortunately, according to CoinShare, this scenario is completely unlikely.

The truth is that no one knows which of these scenarios will eventually turn into reality in the coming weeks and months. Cryptocurrencies have convinced us several times that they do not follow the expected path and can always surprise us. From the investor's point of view, the key consideration is the ratio of potential profit and risk. Historically, however, investing in cryptocurrencies is undoubtedly an investment opportunity that you would have a hard time to find in the ordinary financial market. Now is the ideal time to dive in if you really trust cryptocurrencies as we do.


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