The first and largest digital currency in the world, bitcoin, surged to a new high of $73,750 in March, driven in part by investors’ excitement over the halving and in part by the US government’s approval of multiple exchange-traded funds, or ETFs, that are based on the cryptocurrency.
Billionaires have flocked to bitcoin, which is up 40% this year, as a result of those financial instruments providing mainstream investors with an on-ramp to obtain exposure to the movements of the cryptocurrency without some of the dangers associated with actually owning the digital currency.
Since the halving is dependent on how quickly bitcoin tokens are produced through the complex computational process known as mining, the timetable is not exact.
Halving is most likely to occur this Friday night, April 19, for people in the eastern United States, or early on Saturday, April 20, for people in the Asia-Pacific region.
Gareth Rhodes, managing director of research and consultancy firm Pacific Street, stated earlier this year in an interview that “every halving has historically resulted in some sort of bullish price action.” Which is understandable given that higher supply limitations are expected to result in higher costs.
The “reward” for bitcoin miners decreased from 12.5 bitcoin to 6.25 bitcoin in 2020. It will now decrease from 6.25 to 3.125. On the bitcoin blockchain, miners function as auditors of sorts, verifying transactions with the help of robust supercomputers and receiving payment in bitcoin for their labor.
Naturally, many people who are skeptical of cryptocurrencies warn that investing in digital assets is dangerous at best and that they have not yet proven to have practical utility in the real world.
According to software engineer and well-known cryptocurrency critic Molly White, “it’s unclear to what extent the past price movements were caused by the halving, versus simply correlated with it,” in her newsletter Citation Needed.
“Notably, the previous halving in May 2020 coincided with massive macroeconomic changes in the early months of the COVID-19 pandemic, which drove a wave of bored day traders into cryptocurrency and shifted money into riskier asset classes overall.”
