- Bitcoin price briefly hit $10,000 yesterday—and it's testing that mark again today.
- It's the highest it's been since February.
- Can we expect the price to be above $10,000 at the halving?
Yesterday, Bitcoin’s price briefly hit $10,000, the highest it’s been since February, before falling back down somewhat. Today’s it’s back, testing the numerical milestone, currently at $9,984 at time of writing.
In just four days, the amount of Bitcoin that miners receive for mining new blocks on the Bitcoin blockchain will cut in half. This takes place every four years due to a monetary policy hardcoded into the Bitcoin consensus protocol. This is known as the Bitcoin halving.
Theoretically, this means that, since the supply of new Bitcoin is effectively halved (unless miners work even harder to compensate), demand for Bitcoin will increase. And historically, the halving has been associated with an increase in the price of Bitcoin.
“This halving event is the same as previous ones technically. But the way that it’s different is everything going on around the halving,” Aaron Henshaw, CTO of Bison Trails, told Decrypt. “There are so many more exchanges and so much more visibility,” he said, adding, “Blockchain and cryptocurrency are more part of our common mind share now than even four years ago.”
But how will the price react?
The bearish view on Bitcoin
Simon Peters, a market analyst at trading firm eToro, told Decrypt that Bitcoin’s $10,000 price could be sustained by the time the halving happens, “given we are at these levels already.” He thinks the price hike was due to whales accumulating Bitcoin ahead of the halving, and as a way to hedge against inflation of fiat currencies.
But post-halving, Peters is less sure that the price will keep up. He said that some of those investors who bought at Bitcoin’s trough in mid-March could “start to realize these profits” by selling off their Bitcoin. If enough people do this, this could deflate Bitcoin’s price.
“I personally feel there is a 70% chance we’ll see a quick retracement / sell-off just after the halving. [We] may see $7-8k being tested again before pushing higher,” he said.
But Henshaw hazards that the markets have become more efficient “because there’s more money in them and more sophisticated participants. There are more people and more complex products. So we might not see such an insane run up,” he said. This could mean that the price won’t be affected that much at the time of the halving.
The case for a market rally
But others are more bullish.
“Hell, you have the biggest acts of [quantitative easing] happening in every market and the halving is happening at the same time,” said Sinjin David Jung, managing director of the International Blockchain Monetary Reserve. “With most other currencies other than the US dollar taking a beating, we can forget talking about $10k; this is going to be Bitcoin’s convergence of singularity.”
If the dollar doesn’t prove stable in eight months, and a government should decide to invest in Bitcoin for their foreign currency reserves, “then $10k is going to look like pennies on the dollar,” he said.
Pankaj Balani, CEO of Delta Exchange, told Decrypt that traders on his exchange have been “extremely bullish into the halving,” and that many expect Bitcoin to breach $11,000 before Tuesday.
Since Bitcoin hit $7,500, Balani said that traders have comfortable held positions that predict a price rise; he points to the Bitcoin futures premium on his platform, which is currently trading 0.7% over spot trades. “Given the set-up it looks like Bitcoin should stay buoyant into the halving,” he said.
Binance.US CEO Catherine Coley was similarly optimistic.
“Bitcoin hitting 10K four days before the halving demonstrates just how active and engaged the community is, even during the middle of a pandemic. With Bitcoin’s price on the rise, Google searches for ‘Bitcoin Halving’ are at an all time high, showing us that more people are looking to educate themselves on the halving and on Bitcoin in general,” she told Decrypt.
“At Binance US, we’ve seen user registration triple over the last several months. Confidence in legacy institutions has been shaken by this unprecedented economic crisis, so major financial players and general consumers are seeing the merit in the financial freedom and opportunity offered by digital assets. Personally, while Bitcoin’s price is never predictable, I stay bullish on Bitcoin’s growth as more and more people get involved,” she added.
But unlike regular stock markets, markets won’t close over the weekend. While stock markets may only be a day away from Tuesday (excluding today and, well, Tuesday), Bitcoin’s rally must outlast the entire weekend. The bulls will need everything they’ve got.
Have a news tip or inside information on a crypto, blockchain, or Web3 project? Email us at: firstname.lastname@example.org.