Bitcoin halving to cut the annual inflation rate in half

Written by: Ali Raza
April 28, 2020
  • Mati Greenspan recently announced that May 12th BTC halving will cut BTC annual inflation rate in half.
  • As such, the rate will drop from slightly over 3.6% to 1.8% — even lower than the current rate of gold (2.5%).
  • Current and future financial issues caused by the virus outbreak could inspire many to turn to crypto.

The long-awaited Bitcoin halving continues to approach, now being only about two weeks away. With the uncertainty still being ever-present, there is quite a bit of speculation about what the halving might bring.

Of course, most people tend to focus on things like price and mining profitability. However, one crypto analyst decided to look into the coin’s annual inflation rate, and how it may respond to the event.

Bitcoin inflation rate to drop lower than that of gold

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Crypto analyst Mati Greenspan posted his predictions on Twitter recently. His post shows that he expects Bitcoin’s annual inflation rate to get cut by 50%, and be only half of the global average.

Greenspan revealed this prediction yesterday, April 26th. He noted that the annual inflation will drop from 3.65% to 1.8% after the halving takes place on May 12th.

Many have pointed out that this is no guarantee that new buyers will rush towards BTC once the inflation rate drops. But, even so, the fact is that the drop in the inflation rate will bring it lower than the global average, as well as that of gold. At present, the inflation rate of gold sits at 2.5%. And, as mentioned, Bitcoin would go below even that, to 1.8%.

In other words, it would not be entirely surprising if people start choosing BTC over gold. Especially since the coin became more closely correlated with gold after the last month’s price crash.

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Will mass Bitcoin adoption come sooner than expected?

Meanwhile, the traditional finance industry continues to see difficulties. Recently, analysts reported that the current stock market behavior mirrors that that preceded the Great Depression, nearly a century ago.

With fears of inflation and an even larger economic meltdown, Bitcoin might become a hedge against the total failure of the financial industry. The COVID-19 pandemic-caused fears did lead to the crash of the traditional markets. However, it was the governments’ measures in response to the crisis that might lead to issues like inflation.

If this starts to happen, the demand for BTC might see a serious surge worldwide. The coin has a fixed total supply, and the upcoming halving will reduce the number of new coins entering into circulation. While nothing is decided yet, the asset’s future certainly does seem rather bullish at this point.