When Bitcoin’s (BTC) halving happens, the cryptocurrency’s annual inflation rate would be almost half the global average.
Mati Greenspan, a crypto expert, said on his Twitter account that Bitcoin’s annual inflation (BTC) would decline from 3.65 percent to 1.8 percent when the halving happens. The global average inflation rate hit 3.41 percent last year, and around 3.56 percent so far in 2020.
“In just 15 days, the annual inflation of #bitcoin will go from 3.65% to just 1.8%… approximately half of the global annual inflation rate.
At this point, adoption doesn’t even need to grow to sustain the price anymore. Satoshi either knew what he was doing or got really lucky. pic.twitter.com/ml1eXZFrO4
— Mati Greenspan (tweets are not trading advice) (@MatiGreenspan) April 26, 2020”
While several analysts expected the low inflation rate not to lead new investors to buy BTC, the reality remains that if the halving occurs in two weeks, the cryptocurrency’s price would be lower than the global average and gold price.
Hedge against inflation
The world’s king coin may be used as hedge against the inflation the US would face after the government’s “unlimited quantitative easing” measures implemented in response of the financial crisis. It is already used in countries such as Venezuela and Zimbabwe, whose economies suffer hyperinflation.
If the world sees a significant rise in demand for BTC after the halving, it may form a bullish trend in the near term.
Halving is one of the major events occupying the minds of crypto community currently, and it means slashing the rewards given to Bitcoin miners.
The process is mainly aimed at reducing the reward of miners and thus preventing the cryptocurrency from inflation.
It is very similar to what happens to gold. The more they mine gold, the more they deplete the mine.
A total of 18.23 million coins have been mined, representing nearly 86.82% of the total number of Bitcoin to be ever produced, according to bitcoinblockhalf website.
Once 21 million coins are mined, the network will never produce anymore.
On the other hand, miners stopped mining new Ripples (XPR), and they currently trade one third of the available XPR and hold the remaining two thirds.