The model is based on the relationship between the existing stockpiles of bitcoin and the yearly production rate of new bitcoins through digital mining. Roughly every four years, a “halving” event occurs that reduces the rewards for mining the cryptocurrency by 50 per cent.
The most recent halving event took place in May 2020, right at the beginning of the latest price rally. It has since risen from below $10,000 to the new all-time high of $64,863 that it hit this month.