On May 11, 2020, Bitcoin experienced its third “halving” — a programmed event that cuts the reward miners receive for each new block in half. The previous halvings had occurred in 2012 and 2016, and both had preceded major bull runs. Historically, halvings have been bullish for Bitcoin’s price because they reduce the rate at which new bitcoins enter the market, effectively creating scarcity.
The 2020 halving came at an extraordinary moment in history. The world was in the middle of the COVID-19 pandemic. Central banks around the world were printing trillions of dollars in stimulus. Governments were running massive deficits. For Bitcoin’s “digital gold” narrative, this was the perfect storm: a hard-capped asset entering supply shortage just as the world was flooded with fiat currency.
Institutional investors began paying attention in a way they never had before. In August 2020, MicroStrategy, a public company run by CEO Michael Saylor, announced it had purchased $250 million worth of Bitcoin for its treasury. Saylor said the company had concluded that holding cash was financially irresponsible given inflation, and Bitcoin was the best alternative store of value. This was unprecedented — a public company putting Bitcoin on its balance sheet.
Other institutions followed. Square, Jack Dorsey’s payments company, bought $50 million of Bitcoin. Tesla, led by Elon Musk, bought $1.5 billion. PayPal announced users could buy and sell Bitcoin through its platform. Fidelity launched Bitcoin services for institutional clients. Massachusetts Mutual Life Insurance bought $100 million of Bitcoin. The floodgates had opened. Each institutional purchase was celebrated by crypto media and drove the price higher.
By the end of 2020, Bitcoin had reached a new all-time high of around $29,000 — surpassing its 2017 peak. The rally continued through 2021, with Bitcoin eventually reaching $69,000 in November. But more important than the price was the shift in perception. Bitcoin was no longer a speculative toy or a criminal tool. It was becoming a legitimate treasury asset, held by public companies, mentioned in earnings calls, and discussed by Wall Street analysts. The 2020 halving marked the moment when Bitcoin crossed from fringe to mainstream for institutional investors.
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