Next Bitcoin Halving to Cut BTC Inflation Rate to 1.8%, Less Inflationary than Fed’s Targeted 2%
The clock is ticking as the block reward halving event comes closer and closer with each passing day. Currently, there are 399 days left for this historic event that is scheduled for May 24, 2020. This event will cut down the block reward in half from 12.5 BTC to 6.25 BTC.
Unlike our current fiat system which has no limit to currency printing, there could ever be only 21 million BTC produced. Out of this, 84.07 percent that is 17,655,663 BTC are already mined and only 3,344,338 are left to be mined.
This milestone in the world’s top and most popular digital currency will make it less inflationary that the target of central banks.
Currently, the bitcoin inflation rate per annum is 3.79 percent which will come down to 1.8 percent after this upcoming halving event.
By Satoshi’s design, every 10 minutes a block is generated that sees 1,800 BTC produced every day leading to an inflation of 3.79 percent. However, once the halving event occurs, these 1,800 would be reduced to 900 BTC produced per day that would take inflation rate to 1.8 percent.
This rate is lower than the current targeted inflation rate of the Fed which is set at 2 percent. This target is set as it is “most consistent” over the longer run with the Fed’s statutory mandate. However, the problem will arise when the next recession comes as the Fed will have to either opt for treating faster inflation or go for dropping helicopter money.
BTC Becomes More Valuable
With this halving Bitcoin becomes less inflationary than the US economy. As inflation goes down, the value of Bitcoin will rise.
The diminishing and finite supply, not to mention the millions of Bitcoin that have been lost, makes it valuable and a store of wealth. And as inflation decreases, it may reduce the incentive to spend BTC for people.
If we take a look at the US dollar that was created in 1913 by the Federal Reserve, throughout this time, its purchasing power has been constantly diminishing, going to $0.03 in 2013.
Now, the deflationary facet of Bitcoin has led the leading cryptocurrency to be put in the same category as the gold. The yellow metal is a low deflationary commodity which has become the global reserve asset with a market cap of $8 trillion. Industry experts believe the digital gold that is Bitcoin would in the future become a reserve asset that is better at being gold than gold itself.
Investors and analysts have already predicted a wild bull rally leading up to the next bitcoin halving. Historically, this has been a bullish event that saw BTC price skyrocketing. It is expected this time we will be seeing a crazier spike than ever.