Why Are Crypto Traders Focusing On The 2020 Halving?

In May 2020, Bitcoin is scheduled to have its third halving, an event that will reduce production of the digital currency by 50%. While the Bitcoin network has experienced two halvings already, in 2012 and 2016, market participants are paying keen attention to this upcoming event to see whether it turns out differently.

The digital currency markets have changed over the years, attracting a more diverse group of participants and benefiting from a steadily evolving regulatory environment. As for why this latest halving may be different, market observers are focused on a handful of key considerations.

The Halving Explained

Approximately every four years, the Bitcoin network undergoes a halving that results in the mining incentive, which is the reward that miners receive for mining blocks, being reduced by 50%.[1] When the 2020 halving takes place, the mining reward will be reduced to 6.25 BTC, down from its previous value of 12.5 BTC.[1]

How Is The 2020 Halving Different?

One major reason the halving may be different this time is that the digital currency markets have become more mature over time. Arthur Vayloyan, who is both CEO and a board member of financial services firm Bitcoin Suisse AG, spoke to this during an interview with CNN Money Switzerland.[2]

Start Trading Bitcoin with Confidence

Get a free practice account today.

"We have seen a major change in the participants," he said in regards to the people and organisations involved with the crypto industry.[2] "Before, it was the interested technical people with a high affinity to something new. But more and more we see now institutionals [sic] coming in — be it the banks, be it the central banks even. And they look at the technical opportunity that stands behind the crypto technology."

"I think, after ten years, it's fair to say that it has reached a fair level of maturity," said Vayloyan when describing the Bitcoin market.[2] "And maybe the best gauge I can give: looking at the institutionals [sic] — those who have assets from their clients — they have an extra fiduciary responsibility to look at it. And they come in and look at it and do things."

Another sign of the crypto market's continued progression is the interest of central banks. Several of these financial institutions are working on creating their own digital currencies, which would be fiat currencies (for example, the U.S. dollar) issued in digital form.[3]

How Will The Halving Impact The Markets?

The last two halvings have been followed by compelling gains, as the price of Bitcoin climbed sharply in the year after these events.[4] This time around, market experts have differing views on whether the halving is already priced into the markets.[5]

Many investors have already prepared for the event, so they have probably priced in this particular halving more than the previous ones, according to a Reuters survey gathering responses from seven crypto traders and miners.[4]

The Reuters poll participants also predicted that the event would likely result in more robust trading activity and heightened volatility.[4] One development that is portending higher volatility close to the time of the halving is the markets for Bitcoin derivatives, according to Jeff Dorman, chief investment officer of financial services firm Arca.[4]


Many crypto traders are paying close attention to the 2020 halving because they want to see whether it ends up being different from prior halvings. The digital currency markets have evolved over time and drawn a more diverse group of interested parties. Retail investors, financial institutions and even central banks have taken an interest in digital currencies, and now central banks around the world are working on creating digital fiat currencies.

After the first two halvings, in 2012 and 2016, the digital currency experienced some notable upside. As for whether investors have already priced in the 2020 halving, analysts have offered mixed responses, with a Reuters survey finding that many market participants are prepared for the event.

Past performance: Past performance is not an indicator of future results.

FXCM Research Team

FXCM Research Team consists of a number of FXCM's Market and Product Specialists.

Articles published by FXCM Research Team generally have numerous contributors and aim to provide general Educational and Informative content on Market News and Products.



Retrieved 31 Mar 2020 https://cointelegraph.com/explained/bitcoin-halving-explained


Retrieved 31 Mar 2020 https://cnnmoney.ch/on-the-block/bitcoin-suisse-delivers-2020-crypto-outlook/


Retrieved 31 Mar 2020 https://www.reuters.com/article/us-cenbank-digital-currencies-explainer/explainer-central-bank-digital-currencies-moving-towards-reality-idUSKBN1ZM2JH


Retrieved 31 Mar 2020 https://www.reuters.com/article/us-crypto-currencies-halving/heard-of-bitcoins-halving-its-set-to-shake-crypto-markets-in-2020-idUSKBN1YN19A


Retrieved 31 Mar 2020 https://www.forbes.com/sites/ktorpey/2020/01/17/the-bull-case-for-bitcoin-in-2020/#291840813878

${getInstrumentData.name} / ${getInstrumentData.ticker} /

Exchange: ${getInstrumentData.exchange}

${getInstrumentData.bid} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.