The Bitcoin Cash (BCH) network is approaching its first-ever halving event, set to occur at block height 630,000. This event, expected around 10 PM UTC on April 8, will reduce the block reward for miners from 12.5 BCH to 6.25 BCH. Consequently, the daily production of new BCH will drop from approximately 1,800 coins to just 900.
Halving events are significant in the cryptocurrency world because they underscore a key feature: a fixed, diminishing supply that enhances scarcity. In the coming days and weeks, other members of the "Bitcoin family," namely BSV and BTC, are also scheduled to undergo their own halvings. This mechanism is a fundamental differentiator between cryptocurrencies and most fiat currencies or other digital monetary concepts.
Another reason halvings attract considerable attention is their historical association with price rallies. The reduction in new supply has often preceded periods of rising prices. However, the market's reaction to Bitcoin's halving expectation earlier this year was muted, followed by a significant correction in March. This has led to a more cautious and less euphoric outlook toward halving events in general.
How Does Halving Impact BCH's Price?
The recent market downturn had dampened spirits, but the past few days have seen a tentative recovery across global financial markets, with cryptocurrencies showing particularly strong rebounds. On April 7, BCH rose from around $240 to a high of $265, marking a single-day gain of over 10%. This provided a positive backdrop for its halving day.
After a brief pullback, BCH resumed its upward trajectory on the morning of April 8. Within just two hours, the price surged from $250 to nearly $280, an increase of about 12%. At the time of writing, BCH was holding steady above $270.
This impressive performance stands out in today's market and has delighted BCH holders, although it also liquidated some short positions.
It's important to note that BCH, while forked from Bitcoin, has a different development and governance structure. It is primarily developed by the Bitcoin ABC team and is heavily influenced by mining pools associated with Bitmain. This has historically led to labels like "Jihan's Coin" or "Mining Tyrant Coin." Due to its relatively smaller market capitalization, the cost of influencing BCH's price is often lower, leading to more dramatic short-term price swings compared to Bitcoin—a characteristic also shared by BSV.
So, the pressing question is: will the price surge continue after the halving?
Conventional wisdom suggests that miner-reward halvings are often followed by short-term price declines. However, the market dynamics in 2020 have already broken from historical patterns. The severe crash in March caused most major cryptocurrencies to give up their gains from the beginning of the year, making another sharp drop less likely. Furthermore, the fact that BTC, BCH, and BSV share mining algorithms allows miners to switch their hashing power between these networks. This flexibility helps regulate miner profitability and makes a widespread miner shutdown due to unprofitability less probable.
Is the "halving rally" still something to expect in the current climate? The direct effect of a halving is a reduction in supply—the daily sell pressure from miners decreases. If demand remains constant or increases, this should, in theory, lead to a higher price. However, BCH's market cap represents only a tiny fraction of the total cryptocurrency market. Therefore, its price movement has a minuscule impact on the overall market trend. For BCH's price to find sustained upward support, its supporters would need to continuously increase their holdings, implying a consistent inflow of capital. Without a broader market bull run, any upward price movement may be limited.
A cryptocurrency's price is also intrinsically linked to the health of its network—its security, hashing power, and mining difficulty.
What Does the Future Hold for the BCH Network After Halving?
Bitcoin Cash was born from a hard fork of the Bitcoin blockchain on August 1, 2017. Its development path increased the block size limit to 32MB and adjusted the Difficulty Adjustment Algorithm (DAA). These changes significantly improved transaction verification speeds compared to the original Bitcoin network.
However, the network suffered a major blow during the "hash war" with Bitcoin SV (BSV), which led to a significant loss of community support. This first halving event presents not just a potential catalyst for price volatility but also a test for the network's hashing power and development.
Why is that? BCH's halving occurs over a month before Bitcoin's. Since the same mining hardware can be used to mine both BTC and BCH, miners are likely to shift their resources to the Bitcoin network where rewards remain higher—at least until the next difficulty adjustment or until Bitcoin itself halves.
Miner revenue comes primarily from block rewards. After the halving, this income is cut in half. Profit-driven miners will naturally switch to mining more profitable coins, like Bitcoin, potentially returning only after difficulty adjustments or Bitcoin's own halving. This migration leads to a loss of hashing power (hash rate) for the BCH network. A rapid decline in total network hash rate can compromise security, increasing vulnerability to attacks like a 51% assault. However, the BCH network has implemented a 10-block reorganization limit, which provides a layer of protection against such threats.
Li Qingfei, CMO of F2Pool, stated in an interview that a portion of BCH's hash rate—roughly 1-2 EH/s—would likely shift to Bitcoin. Given that BCH's current total hash rate is approximately 3.55 EH/s, this would mean a reduction of nearly half, which could potentially impact network operations.
Yang Haipo, founder of ViaBTC mining pool, has also noted that for both BTC and BCH, with the total supply fixed, lower block rewards will make miner revenue more dependent on transaction fees. BCH has not yet achieved mass adoption, and its on-chain transaction volume remains relatively low. Therefore, transaction fees alone are unlikely to meet miners' profit requirements in the short term, which could affect the network's long-term health.
For these reasons, most BCH supporters hope the cryptocurrency will achieve widespread adoption, fulfilling its original vision of being used for small-scale payments and a variety of everyday transactions.
Since its inception, BCH has aimed to realize Bitcoin's original goal of being a "peer-to-peer electronic cash system." Its upgrades, including block size increases and the rejection of SegWit, along with bi-annual technical improvements, all focus on solving issues like high fees, slow verification times, and poor practicality—all to enhance network efficiency and expand its use cases.
Progress has been made. According to its official website, over 190 online and physical merchants worldwide now accept BCH, including major companies like Microsoft and BitPay. Furthermore, the recent integration of USDT onto the BCH blockchain is a step toward expanding its ecosystem.
However, a significant challenge for BCH is that its development has largely been funded by community donations. This model leads to instability and uncertainty in funding. Many developers work on the project part-time, which can affect the pace of development and the progress of ecosystem growth. The recently debated "miner donation plan" was a community-driven initiative aimed directly at addressing this core funding issue.
In the long run, BCH has areas to improve regarding sustainable funding, professional planning, and community organization. The path to achieving its goal of becoming "a reliable money for everyone in the world" is still long and requires continued development and adoption.
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Frequently Asked Questions
What is a cryptocurrency halving?
A halving is a pre-programmed event that reduces the block reward granted to miners by 50%. It occurs at regular intervals (e.g., every 210,000 blocks for Bitcoin) and is designed to control inflation by gradually reducing the supply of new coins entering the market.
Why did BCH's price surge before the halving?
Price often increases in anticipation of a reduction in new supply. Traders and investors may buy ahead of the event, expecting decreased selling pressure from miners and potential future price appreciation based on historical trends.
Can the BCH network remain secure with lower hash power?
A significant drop in hash power increases the theoretical risk of a network attack. However, BCH's 10-block reorganization limit provides a security mechanism that makes such an attack computationally expensive and economically unviable, even with lower overall hash rate.
What happens to miners after the BCH halving?
Miners facing a 50% reduction in block rewards will likely seek more profitable opportunities. Many will switch their mining hardware to other compatible networks, like Bitcoin, and may return to BCH after its mining difficulty adjusts downward or after Bitcoin's own halving.
How does BCH differ from Bitcoin (BTC)?
The primary difference is the block size limit. BCH has a larger block size (32MB vs. BTC's 1MB-4MB), which aims to allow more transactions per block, lower fees, and faster verification times. Their development communities and roadmaps also differ significantly.
Is BCH a good long-term investment?
Like all cryptocurrencies, BCH carries significant investment risk. Its long-term value will depend on widespread adoption, technological development, and overall market conditions. Its recent progress in merchant adoption and ecosystem expansion are positive signs, but its dependency on community funding remains a challenge.