Investor excitement surrounding Bitcoin is

resurging as the quadrennial ‘halving’ approaches.

Bitcoin surged to $US50,000 on Monday for the first time in two years, spurred by a wave of new investor enthusiasm and mounting anticipation surrounding an enigmatic event known as “the halving.”

Although Bitcoin retreated back into the high 40s on Tuesday, breaking a seven-day streak of gains, it remains significantly below its all-time high of around $US69,000.

Nonetheless, Bitcoin has demonstrated an extraordinary resurgence over the past eighteen months, skyrocketing over 200 per cent from its 2022 low of $US16,000.

Several factors are propelling the current Bitcoin fervor, including a surge of capital from investors in newly launched Bitcoin exchange-traded funds (ETFs) and excitement surrounding the halving, a period when the rate of Bitcoin production is halved.

“Now that $US50,000 has been surpassed, $US69,000 followed by $US100,000 seem attainable in 2024 as attention shifts from the ETFs to the imminent halving,” remarked Antoni Trenchev, cofounder of crypto lender Nexo Capital. “This is particularly exhilarating because, if history repeats itself, the next 12 to 18 months will be a whirlwind for crypto.”

The halving, also known as the “halvening,” is a core tenet of the Bitcoin ethos. In essence, the halving is a feature in Bitcoin’s architecture that automatically reduces the pace of new coins entering circulation. It occurs approximately every four years and theoretically drives the price of Bitcoin higher.

To grasp its mechanics, one must understand Bitcoin’s fundamental premise as a decentralized asset — its value is not dictated by a central authority but by a sprawling peer-to- is intentionally finite — only 21 million coins will ever exist — and this scarcity underpins its value proposition, advocates argue. By halving the reward periodically, Bitcoin combats inflation while also incentivizing miners. As inflation decreases and Bitcoin becomes scarcer, the theory posits that its price will ascend.

“Each halving has historically spurred bullish price movements,” noted reason to be optimistic, provided they can weather the short-term volatility inherent in crypto markets. In the lead-up to and aftermath of Bitcoin’s inaugural halving in 2012, its price surged by approximately 30,000 per cent, according to Rhodes. Similarly, the 2016 halving yielded an almost 800 per cent increase over two years, while the 2020 event resulted in a 700 per cent gain.

The impending halving is setting the stage for a high-stakes chess match in the markets, according to Henry Robinson, co-founder of Decimal Digital Currency.

“Sentiments are bullish, particularly in the long term, but the psychology surrounding such a significant event can fuel significant volatility,” he observed.