NEW YORK (Reuters) - Bitcoin is about to undergo a scheduled technical adjustment as the number of new coins awarded the computer wizards who “mine” the cryptocurrency will be cut in half, but forecasting which way its price will move afterward is more complicated now.
A small toy figure and representations of the virtual currency Bitcoin stand on a motherboard in this picture illustration taken April 17, 2020. REUTERS/Dado Ruvic/Illustration
Investors are widely anticipating this so-called “halving,” the third in bitcoin’s 11-year history. The previous events fueled huge rallies in bitcoin’s market value, but there is a wildcard this time in the form of the coronavirus pandemic, some analysts said.
“From an efficient market perspective, any fundamental reaction to the halving should be heavily priced in at this point; after all, it’s hard to imagine a more predictable event than an unalterable supply reduction that has been scheduled for more than a decade in a liquid, heavily-traded ... asset,” said Matt Weller, global head of market research at GAIN Capital.
Bitcoin relies on so-called “mining” computers that validate blocks of transactions by competing to solve mathematical puzzles every 10 minutes. In return, the first to solve the puzzle and clear the transaction is rewarded new bitcoins.
Bitcoin’s technology was designed in such a way that it cuts the reward for miners in half every four years, a move meant to keep a lid on inflation.
The mining reward is currently 12.5 bitcoins per block mined. In this week’s halving, the reward will fall to 6.25 new bitcoins.
Yeah what an time for the bitcoin halving. Let's see what's coming our way. Btw nice article.