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.

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.

In the run-up to this week’s halving, bitcoin had surged nearly 40% since the beginning of the year and climbed more than 85% from its lows. It was last down 1.4% against the dollar at $9,999.67 BTC=BTSP.

Bitcoin crossed $10,000 overnight after Bloomberg reported that hedge fund manager Paul Tudor Jones had bought bitcoin as a hedge against inflation.

By comparison, the dollar index =USD is up 3.3% so far this year.

HALF, AND HALF AGAIN

The first halving occurred in November 2012 when it was reduced from 50 bitcoins to 25, and the second occurred in July 2016 when it was further cut to 12.5 bitcoin. This deflationary event has historically signaled the start of bitcoin’s most dramatic bull runs over a period of several years, although not before a brief sell-off.

The previous two bitcoin halvings propelled rallies of about 10,000% from late 2012 to 2014, and roughly 2,500% from mid-2016 to the currency’s all-time high just shy of $20,000 (16,101.8 pounds) in December 2017, according to traders.

Ryan Watkins, a research analyst at crypto data platform Messari, believes the economic fallout from the coronavirus outbreak could be one major obstacle to bitcoin’s bull run after the “halving”.

“The force of bitcoin’s prime marketing event is colliding with the opposing force of an incredibly uncertain macroeconomic environment that continues to be an overhang on every asset class,” Watkins said.

For Jake Yocom-Piatt, co-founder and project lead at cryptocurrency Decred, however, believes halving will be a positive event for bitcoin and cryptocurrencies, especially in a pandemic.

“A pandemic is very much a deflationary type event. Economic activity is going to take a real nosedive. The ‘halving’ of bitcoin is a necessarily deflationary action,” said Yocom-Piatt, adding that such a scenario would be bullish for cryptocurrencies.

Some analysts said there are signs a major rally may be under way, with retail or individual investors involved.

Bitcoin bulls say the price of bitcoin should go up as supply runs down and assuming demand is steady.

Dan Morehead, co-chief investment officer at Pantera, said bitcoin could peak at $115,212 based on supply and demand dynamics.

“I realize that price may sound ludicrous to some today. But $5,000 sounded equally ludicrous as our first written price forecast when we launched Pantera Bitcoin Fund at $65 per bitcoin,” Morehead said.

“Just saying that there’s more than a 50-50 chance bitcoin goes up – and goes up big.”