It's difficult to miss bitcoin's parabolic price rise in June, despite its latest tumble.

The currency started 2019 below $4,000 and at one point last week neared $14,000 before stumbling this week and dipping below the $10,000 mark. Still, bitcoin appears to be experiencing one of its most profound bull runs since 2017 when the token eventually approached $20,000.

By most metrics, bitcoin is the best performing investment asset this year, outpacing stocks, bonds, gold, and oil in annual returns.

Much of this bullish sentiment is attributed to the ancillary excitement surrounding Libra, Facebook's long-awaited cryptocurrency. Information about the project was released in a white paper on May 18, bringing with it notable fanfare and speculation about the role of cryptocurrencies in the digital age.

At the same time, bitcoin's price began to rise, surpassing both the $10,000 and 11,000 thresholds in the days after the announcement. To be sure, there is a degree to which this is true.

For instance, a study by Yale professors Aleh Tsyvinski and Yukun Liu found that "investor attention effect" has a real impact on crypto markets. However, correlation and causation are not the same thing, and to assume that bitcoin's ascension is accredited exclusively to Libra's announcement is to miss the broader context of its ecosystem and the many factors that contribute to its price movements.

Blockchain Rewards Impact Price

The bitcoin blockchain is maintained by "miners" who deploy high-powered computers to solve the mathematical equations that validate the currency's transactions. Whoever completes this process fastest is compensated in newly minted bitcoin.

Currently, miners receive 12.5 bitcoin per "block" -- a term for a batch of data files on to bitcoin's network, much like a record book, that get recorded. Miners earn bitcoin for their efforts, but those rewards decrease over time. Much like "real world" precious metal mining, technology improvements yield faster bitcoin mining. Therefore, built into bitcoin's original plans is a "halving" mechanism that cut the reward to compensate.

The bitcoin reward halves every 210,000 blocks, which so far works out to every four years. For bitcoin wonks, the reward will hit to zero when miners hit bitcoin's limit of 21 million in "circulation" -- which, by the math, will be around year 2140. After that, miners will continue to get a reward for record keeping in the form of transaction fees.

The next change is scheduled for May 20, 2020 when rewards will diminish to 6.25 bitcoin per block created. This event, known as a "halving," tends to have a positive impact on bitcoin's value, since it slows bitcoin's mining rate and creates scarcity

Historical Precedence

We've seen this before.

When the bitcoin reward decreased from 50 bitcoin per block to 25 in 2012, the token saw a significant upward trend beginning in November 2011 that eventually more than doubled bitcoin's value by more than 300% over the next year.

Similarly, when block rewards halved to 12.5 bitcoin in 2016, the price saw a similar uptick nine months before the event.

To put it simply, investors tend to respond positively to a forthcoming block reward halving, a trend that begins roughly one year before the actual event. We currently reside squarely in that timeframe, and, although blockchain reward halving doesn't make the same headlines as Facebook's cryptocurrency, it's having an important impact on investor sentiment.

Of course, the upcoming reward halving isn't the only factor contributing to bitcoin's recent ascension. Investors increasingly view bitcoin as a hedge against global volatility, something that is evident in everything from the U.S. trade war with China to rising tensions with Iran and North Korea.

At the same time, bitcoin is gaining more support from institutional investors, and some major retailers are beginning to accept the cryptocurrency at checkout.

Taken together, bitcoin has several factors working in its favor, and they are collectively driving a bull run that is helping the first and most popular cryptocurrency maintain its prominence in the global financial ecosystem.

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The author holds stock in investment holding company, Leucadia (Jeffries), and remains a partner in an emerging-technology fund. He holds no positions in cryptocurrencies nor in any companies that invest in them.