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Crypto Pain Continues as Bitcoin Hits 6-Month Low

Crypto Pain Continues as Bitcoin Hits 6-Month Low

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2 Reasons To Bet On Bitcoin Right Now

Bitcoin

In only nine days, Bitcoin will undergo its third “fork”, reducing the rate at which new bitcoins are created and slowing the digital inflation. The million-dollar digital question now is what this will mean for the world’s favorite cryptocurrency at a time when it has been enjoying one of its best weeks in a long time, even hitting over $9,000.   The bitcoin bulls are betting big that the crypto will keep climbing because of the halving that will reduce supply, that’s only part of the reason it’s been gaining over the past week. The Binance crypto exchange got a $50-million transfer of Tether--stablecoin tokens pegged to the U.S. dollar, and that’s when the bitcoin bounce really set in. 

How much of the rally was inorganic and a result of the tether transfer, and how much was the result of anticipation of smaller supply is difficult to ascertain in the crypto world, but all eyes will be on what happens on May 12, when the third split takes place. 

Source: Coindesk

BItcoin earlier halvings took place in November 2012 and July 2016, each time reducing the rewards given to miners for minting coins. In 2012, block rewards went from 50 BTC to 25 BTC, and in 2016 from 25 BTC to 16 BTC. Halvings will take place until the ultimate number of bitcoins--21 million--are created. 

After the May 12th halving, Bitcoin annual inflation will decline from 3.65% to 1.8%, according to Quantum Economics founder Mati Greenspan. 

Related: Gold Prices Stuck In Limbo Ahead Of Key Fed Decision

Over the weekend, bitcoin managed to surpass the $9,000 mark twice, before retreating to around $8,800 on Sunday, and while some worry that the halving is already priced in now, others are decidedly more bullish. 

One analyst told Forbes on Friday that bitcoin will likely top $10,000 before May 12th. 

Citing a “frenzy of activity among bullish investors”, Simon Peters, cryptocurrency analyst at eToro brokerage, told Forbes: "We think it is likely the [bitcoin] price will go above $10,000 before the halving actually takes place."

Likewise, MarketWatch cited Edward Moya, senior market analyst at Oanda, as writing to investors: “Bitcoin may have a couple more attempts at breaking back towards the psychological $10,000 level, but right now it seems the fundamentals could easily support that.”

Fundstrat’s David Grider also expects bitcoin prices to continue to climb, with an outlook of $14,350. 

According to Elliott Wave technical analyst Benjamin Blunt, who has nearly 55,000 followers on Twitter, BTC should hit $10,000. He sees bitcoin dipping again into the low $8,000 range and suggests that this is the dip on which to buy before the real rally. And he’s been right before

Bullish or not, bitcoin has outperformed gold over the past 13 months, with the digital currency up 23% and gold futures up about 12% for the same period. 

But the bears are also coming out of the woods on this one, even if bitcoin has been outperforming traditional assets during the pandemic. Just as many think it’s overbought and signalling a sell-off. 

Analyzing where bitcoin will go in the COVID-19 environment is a vastly different ball game. Bullish or bearish, one thing cannot be overlooked: Bitcoin has clearly come out on top in the pandemic and it’s demonstrated its ability to preserve wealth in a time of crisis, according to Travis King, CEO of crypto hedge fund Ikigai. 

By Michael Kern for Safehaven.com 

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