For the third time in its short life, bitcoin is about to undergo a “halving” — when the number of new coins awarded to miners of the digital currency is slashed by half. Given previous halvings propelled huge bitcoin rallies, many are wondering what the effect might be this time as the COVID-19 crisis rages.
The first halving occurred in November 2012, from 50 bitcoins to 25 and bitcoin rallied 10,000% between late-2012 and 2014. It was then cut in July 2016 to 12.5 bitcoins and prices rose roughly 2,500% from mid-2016 to record highs in December 2017 of just below $20,000.
Year-to-date, bitcoin has risen nearly 40%. It stands around $10,000 ahead of the upcoming halving that will take the reward to 6.25. Some doubt the scintillating rallies of the past two halvings can be repeated. Others reckon however that bitcoin, representing a hedge of sorts against the chaos, is well positioned to outperform. They note that during this pandemic its returns have beaten gold, stocks and U.S. Treasuries.