The price of Bitcoin is starting to kick into high gear as the mining reward halving edges ever closer. There are about two weeks to go until the amount of Bitcoin unlocked for solving an equation leading to a new block is cut from 12.5 to 6.25 BTC. This will, of course, have a significant impact on the mining sector, but it is also expected to impact the market itself.
Bitcoin’s market is still very new and nascent, and as such, an event which essentially leads to higher scarcity, lower supply, and seemingly more demand, is not entirely understood. However, there are a few general factors that point to this event being one which will lead to increased price action from the major cryptocurrency.
Macroeconomic policies dictate that if there is a lower supply of an asset, there should be higher demand, and higher demand usually indicates a price increase. What backs up these basic principles, even more, is that in the past two halvings, the high Bitcoin reached from that date has been nearly 14,000 percent bigger each time.
If history repeats itself, the high for Bitcoin following this halving could be as high as $40,000 per coin. Of course, there is a long way to go before that price point is reached, as Bitcoin is still under $10,000, but, the price is moving and has crossed a key resistance point of $8,000 with two weeks to go to the halving.
It is not too surprising that Bitcoin is making its march ahead of the halving, even despite the Covid-19 induced market panic, as the coin is known to move on the rumour more than the actual fact. And, the fact that Bitcoin will become more scarce, and it will be harder to mine, also means there is bound to be some accumulation leading up to this big event.
In fact, Bitcoin has been on an uptrend for over six weeks now, and this comes after its damaging market collapse on the Covid-19 news in mid-March where the coin fell as low as $3,800. It’s rebound is against the general, global, trend, and seems to be highly predicated on the halving. More so, it seems that people are also looking at Bitcoin for its potential to alleviate the impact of a possible impending recession.
Erasing the pain
The year started on such a positive foot for Bitcoin as January saw 30 percent gains and the early half of February backed up that climb. However, the impact of the pandemic played its part on Bitcoin as it fell in correlation to the stock markets globally.
However, since shaking loose the weaker hands of institutional investors who still saw Bitcoin as a risky investment, there has been a rebound as more crypto-focused investors appreciate the impact of the halving and what Bitcoin can do in a time when markets are under pressure.