- Bitcoin halving likely to lead to higher volumes and extreme volatility.
- Traders, miners and investors are planning on how to make the most out of the May 2020 halving.
The creator of Bitcoin, Satoshi Nakamoto incorporated a rule into the code that executes Bitcoin that sees mining rewards slashed by half every four years. The impact of the reduced mining rewards leads to a reduction in the supply of the coin. The event is known has halving and is scheduled to take place in May 2020.
The reduction in the supply of Bitcoin will affect the players in the market differently considering Bitcoin's total market cap is only $120 billion. These players include miners, traders and investors. They are all looking forward to making the most out of the halving.
Meanwhile, some of the fundamentals likely to be affected immensely are volatility, supply and demand of Bitcoin. Rapid gains and losses due to extreme volatility will characterize Bitcoin’s market after halving. Therefore, losers and winners will rub shoulders but for now, anticipation is growing on how participants will take advantage of the event.
Traders, particularly are expecting higher volumes and extreme volatility. However, the reduction in supply could spike the prices to higher levels. Other parties that benefit from high volatility are quantitative hedge funds and high-frequency traders who mainly make money from price swings.
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