Bitcoin investors are in for a halving event in 2020 that could potentially give their currency a boost, according to Bloomberg.
A halving event refers to the process in which the reward that Bitcoin creators get for creating fresh bitcoins will be cut in half.
Sometimes, it’s referred to as the halvening instead, a reference to the classic fantasy film “Highlander.”
That process is by design and has happened before, resulting in positive outcomes. Once, in 2012, the block reward went from 50 to 25 bitcoins. That caused the prices to rise nearly 8,200 percent in a year.
The second halving, in 2016, resulted in a 2,200 percent gain over the following 18 months.
Those two instances don’t necessarily mean there will be quite a windfall this time when the halving occurs around May 18. Other factors, like increased interest and demand, fueled outcomes in 2012 and 2016, and supply alone isn’t enough to make a prediction on a price increase.
Boosts in bitcoin prices over the summer could be due to the anticipation of the halving, according to analysts like Stuttgart-based Marius Kramer, who works with crypto investing app Ember Fund.
Kramer said the coin always does a 200 percent pump within one year before the halving — and then another much larger one in the year after.
According to analyst Alyse Killeen, partner at investment advisory firm StillMark, bitcoin price surges are often related to anticipation of supply shocks to the coin.
Killeen said bitcoin is introduced to the market when the crypto’s protocol rewards miners who validate blockchain transactions. Miners get 12.5 bitcoin after validating the transactions and adding blocks to the chain that makes up blockchain.
The tally will be halved into 6.25 bitcoin a year later. That will have a dampening effect on the supply and push prices higher.
Yeah Global volatility, analysts note, may also have people going for bitcoins as a kind of alternative to regular financial methods.