Crypto Stocks Surge as Bitcoin Approaches Halving Milestone

Crypto-related companies appeared poised for a buoyant start to the week, with U.S. stocks in the sector showing promise as bitcoin surged past $72,000 for the first time since mid-March in anticipation of its impending reward halving.

In pre-market trading, Coinbase (COIN), the solitary U.S. crypto exchange publicly traded, saw a 4.9% increase, while MicroStrategy (MSTR), the leading corporate holder of bitcoin, experienced a 10% rise. BlackRock's bitcoin exchange-traded fund (IBIT) also saw gains of around 6.5%. The imminent halving, scheduled for April 20, will reduce the rewards for bitcoin miners by 50%, with each block added to the blockchain earning them 3.125 BTC. These halving events occur automatically every 210,000 blocks, approximately every four years. Despite the reduction in block rewards, miners will continue to earn additional transaction fees as per usual.

Bitcoin has undergone three previous halving events, which have successively decreased its block reward inflation from 50 BTC to 25 BTC in 2012, then to 12.5 BTC in 2016, and finally to 6.25 BTC at the most recent halving on May 11, 2020. The total supply of bitcoin is capped at 21 million, with the last coin expected to be mined around 2140, after which miners will rely solely on transaction fees for earnings.

Historically, Bitcoin halvings have preceded significant price fluctuations in the cryptocurrency market, often sparking bullish trends. While the correlation isn't direct, these events have frequently heralded substantial increases in bitcoin's value.

The question of whether the Bitcoin halving is "priced in" is a recurring theme around each event. However, there are indications suggesting that it may indeed be factored into the current market dynamics.