The past eight or so weeks, ever since the Mid-March market collapse, have seen the Bitcoin market in a major recovery to a point where the coin has even topped $10,000 after it went as low as $3,700. The thought through this recovery is that the coin is bouncing back in the midst of a major event in May.
The third Bitcoin mining reward halving is imminent as it is expected on Tuesday where the amount of Bitcoin that a miner receives for unlocking a new block on Bitcoin will offer up 6.25 BTC rather than 12.5 as it has been the past few years.
This is going to have a major impact on the mining ecosystem, but the impact is expected to be felt across the entire Bitcoin ecosystem, and especially the markets. Many people are looking into the impact of more scarcity around Bitcoin and what that will mean for demand, and then for the price of Bitcoin.
So far, the growth in the price of Bitcoin has been rising as the weeks ticked by to the event, especially in the last week or so where Bitcoin really took off. But, it now looks like the growth has halted almost a full day before the event. It is not surprising to see Bitcoin rising on the rumour, and falling on the news. And a dip is also expected post-halving, but the price is dropping already.
Having made it across $10,000 a few times last week, the start of the week and the day before the halving has been less than exceptional as the price of the coin crashed down as into the lower side of $8,000.
This fall is substantial, and strangely timed, but should not be too unexpected as this has happened before in halving, and Bitcoin often “sells on the news”
The previous halving of Bitcoin in 2016 has a similar structure in its charts around this time. However, it must be stated that it occurred in a fairly more robust uptrend than the current halving. There was also a big climb, and a drop off before the halving, and to give more insight into the future, the coin dropped off steeply again after the halving before slowly climbing again.
Looking long term
The action around the halving is no doubt going to be very volatile with much up and down movement as trader try and take advantage of the speculation. That is part of the nature of Bitcoin, and it has been seen many times before.
What is more interesting to watch till be the mid to long term impact of the halving. The economics and measurements make it sound to assume long term growth, but just how long term, and how rapid, is still unknown.