At the time of this writing, Bitcoin is trading at $7,230 with $32.46B volume and a $132.56B market cap after trading below $7,000.00 for most of the past week. Those who have been “long the dip” when it hit the $4,000’s market have already almost doubled their money.
The question remains to be seen as to what the weeks that lie ahead predict for the price of Bitcoin and whether or not the bottom is already in.
With the impacts that COVID-19 had initially, Bitcoin seemed to bear a correlation with the broader equity markets. Many posited that institutional investors who held Bitcoin felt the impact of having their stocks drop dramatically and wanted to convert some of their Bitcoin into cash to rebalance their portfolios.
The Bitcoin price, however, fell a second time in the last few months, with many attributing the crash to inefficient liquidation engines on BitMex. The Wolf of All Streets, a popular account on Twitter postulates that despite the price volatility, Bitcoin was, in fact, more liquid than the bond market in the past month during the downturn of traditional markets.
(1) Bitcoin has retraced the majority of the dramatic crash on March 12th – over 80%. There are a number of theories for why price dropped so hard. The most logical and the one supported by those in the know is that Bitcoin dropped because it is a liquid asset – easy to sell.
— The Wolf Of All Streets (@scottmelker) April 18, 2020
While the financial markets seem to have recovered with the Dow Jones completing its best two-week performance since the 1930s, the longer-term impact of unemployment rising and economic growth slowing may cause consumer confidence to waver and impact the stock market once again.
However, the past month has been an excellent test for the concept of Bitcoin decoupling with several days where the U.S. equities markets earlier this month, closing at a loss even while Bitcoin rebounded above $6,000.
The Bitcoin halving is coming up three weeks from now, which might have also helped cause the current Bitcoin rally. With a 50% reduction in bitcoin block subsidy rewards, there could be a positive trend as people seek to accumulate Bitcoin anticipating positive price movements.
A unique set of market conditions have brought in interest from institutional players such as the $75B AUM hedge fund Renaissance Technologies which has detailed in its Form ADV released late March that its Medallion Funds will be permitted to enter into bitcoin futures transactions and will limit to cash-settled futures contracts traded on the CME.
The Wall Street Journal recently covered the fact that Renaissance’s Medallion fund was up 24% in 2020 through April 14th in comparison with the S&P 500 index that has fallen 11.4% through April 14th.
Medallion uses mathematical models, and its conviction that Bitcoin futures could be a profitable area to apply them indicates positive institutional sentiment around the liquidity of Bitcoin.
Medallion stands as a leader in predictive modeling and machine learning applications boasting 320 employees from various academic backgrounds coding algorithms for the most part. Renaissance’s formal entrance into the market might also inspire other institutional market participants to come into the Bitcoin futures market, making Bitcoin more liquid and fueling further investor demand.
Bitcoin (BTC) Price May Skyrocket Right After Halving, Investor Foresees ‘No Selling Pressure’
Bitcoin (BTC) halving is among the most mysterious events within the crypto’s history. Seasoned investor and Bitcoin educationist Preston Pysh shares his views.
Preston Pysh, Founder of The Investor’s Podcast Network and Buffet’s Books, named three price movement cycles for Bitcoin (BTC), which could follow the third Bitcoin (BTC) halving.
According to Pysh, the halving itself will boost the profits for efficient miners. As a result, they won’t be interested in selling their Bitcoins (BTC) because the price may grow.
Thus, the activity of speculators hand in hand with the confidence of miners may catapult the price of the flagship cryptocurrency to a new all-time high (ATH).
Alongside this utopia, this idyllic picture will end painfully. Miners may start to capture the price margin in order to upgrade their rigs. New mining gear will enter the network hash rate with significant lag. In other words, due to the aggression of sellers, the price may drop for several months.
Within this recession, the periodical difficulty adjustment will assume particular importance. They will bring the network towards the another capitulation of inefficient miners. Once the unprofitable miners are decimated, the system will return to the balance predicted by the ‘stock-to-flow’ model.
As previously reported by U.Today, the third Bitcoin (BTC) halving will occur on May 13, 2020.
Author: Sat, 04/18/2020 – 18:00
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Bitcoin Halving 2020: What Miners Expect of Crypto Markets
Apr 18, 2020 at 14:00 UTC
“If price performance following the November 2012 and July 2016 halvings is any indicator, bitcoin’s price should increase significantly over the 10- to 12-month period following the [third] halving.”
That’s Ciara Sun, head of global business and markets at cryptocurrency exchange Huobi. Speaking on the third podcast episode of “Bitcoin Halving 2020: Miner Perspectives,” Sun was joined by Bitfarms CFO John Rim. The two shared their insights on the expected market impacts of bitcoin’s third halving event.
Sun noted that many crypto investors are expecting a substantial bitcoin price increase in the months following the 50 percent reduction in bitcoin block subsidy rewards. However, Sun also caveated her statement saying the market dynamics leading up to May’s halving event are “more complicated” this time around due to global events such as the COVID-19 outbreak.
No matter the impact on bitcoin’s market price, Rim affirmed miner revenue per terahash would likely readjust and normalize to pre-halving levels as a result of mining difficulty adjustments. “The whole network relies on mining for the validation of transactions and for a self-incentivized system like bitcoin, you need miners to be profitable,” Rim said.
Author: Omkar Godbole