Bitcoin Destination Following its Most Anticipated Event
The long-anticipated Bitcoin (BTC) halving event took place Monday afternoon, New York time. And by the time it happened, BTC was trading below its 10-day and 50-day moving averages. These are bearish indicators following a massive 10% dip in price last May 10. An outage striking San Francisco-based exchange Coinbase triggered this. As of press time, BTC was trading down less than a percent at $8,677.
The Bitcoin halving recently diminished the latest supply of BTC generated by cryptocurrency miners from 12.5 to 6.25 BTC per block. And this is a reduction from approximately 1,800 BTC down to 900 BTC per day. Also, the event arrived amid economic unpredictability because of the coronavirus pandemic.
Argentina-based cryptocurrency exchange Ripio’s CEO, Sebastian Serrano, stated that the international scenario is somehow different compared in 2016. And Bitcoin has never been tried “during a global economic crisis. So, we can expect anything to happen.”
For the short term, traders are expecting unpredictability in the price of Bitcoin. Thus, they anticipate volatility.
They don’t have a massive sample size of the previous halvings. Still, they mostly have a positive effect on sentiment after a short-term period of volatility,” Fairfield Strategies’ managing partner Katie Stockton explained.
Stockton also said that the anticipation of the halving might have contributed to the outperformance by Bitcoin during the last few weeks. And a breakout at as much as $10,055 may unfold after some weeks of choppiness fueled by today’s gap.
Then, Quantum economic founder, Mati Greenspan noted that the halving might not mean that much immediately. However, he agrees that this event would be a significant one over a long-time horizon.
He said, “It is likely to have an impact in the price over the long term, as the reduced daily assurance makes the asset more scarce.”
More on Halving
According to Philip Gradwell, a chief economist at analytics firm Chainalysis, Bitcoin mining pools are already accumulating ahead of the halving. He added that they would likely experience a bit of liquidity crunch due to the halving.
But still, even with higher volumes on Coinbase before the halving of Bitcoin, it does not indicate that volume will further increase in the short term.
Swissquote Bank’s head of digital assets Christopher Thomas believes that they are now in the zone where no major retail money will arrive this week. And he thinks that they will trade around $8,000 to $9,000 for the following week or so. A reasonable chance of a fall to $7,300 may follow, however.
Furthermore, mining hashpower has yet to show a significant decline. Derivatives exchange Alpha5’s options trader, and founder Vishal Shah is taking the wait-and-see approach. He stated that until they see a stabilization in mining activity, for which he wishes to witness the proof in the pudding, “I’m in no hurry to be buying Bitcoin.”
Aside from observing how miners prepared for the event, Shah is also closely watching on the next step on the miners, including keeping track of the amount of mining power they will now need to be shut off. And also, he is keeping an eye on how much selling will occur over the next month.
