Bitcoin price suddenly surges as rare 'halving' event approaches

Cryptocurrency market analysts say record highs could be tested in the coming months

The price of bitcoin experienced unprecedented gains after more than a billion dollars was traded in just one hour. (REUTERS/Benoit Tessier/ Composite)

The price of bitcoin has suddenly surged by more than $1,500, taking the cryptocurrency to its highest value since February.

Bitcoin returned above $9,000 on Thursday morning, reaching as high as $9,400 before slipping to its current price of $9,200.

The price rise comes less than two weeks ahead a rare event known as a halving, which is expected to have a significant impact on cryptocurrency markets.

It is the first time in nearly four years that the event has taken place, and only the third time in bitcoin’s 11-year history.

The same event in 2016 preceded a 300 per cent rise in bitcoin’s value, while the 2012 halving saw bitcoin’s value shoot up by more than 80-times.

Forecasting the price of bitcoin is notoriously difficult due to its volatility, though some analysts claim that similar gains can be expected for the 2020 event.

“With 12 days to go until the halving there is a frenzy of activity among bullish investors and the price is already racing higher, having shot up more than 20 per cent in the last 36 hours,” Simon Peters, a cryptocurrency analyst at the online trading platform eToro, told The Independent.

“The number of actual participants in the market is also hitting new highs amid the expectation that this halving event will play out like the last one and push the price up sharply. With these tailwinds in place, we think it is likely the price will go above $10,000 before the halving actually takes place.”

The halving comes at a time of global economic uncertainty brought about by the coronavirus pandemic, which Mr Peters claimed will force investors to turn away from traditional assets and towards bitcoin.

“Amid the deteriorating economic outlook for the US economy and the likelihood of an ever increasing monetary supply, which weakens the US dollar and stokes inflation fears, we believe bitcoin could easily test previous highs,” he said.

Others suggest that bitcoin could be hit in a similar way to traditional stocks, as investors seek to liquidate their portfolios.

This appeared to be the case last month, when countries around the world were introducing containment measures to slow down the spread of the Covid-19 virus.

During this time, the price of bitcoin fell to a 12-month low of close to $4,000 following a series of flash crashes sparked by a major cryptocurrency sell-off.