Why Bitcoin price is rising today?

Bitcoin halving is slated for May 2020 and the prices have been rising. But if one is to look at the history of Bitcoin pricing, one will understand why there can be a temporary setback after the halving. The leading cryptocurrency has increased by more than 130% since March 13 and the rise has been spectacular in April also. All these positive price developments have occurred just prior to the “halving’ event. Similar price rallies were noticeable when the Bitcoin had been halved in 2012 and 2016.

How is halving affecting Bitcoin prices?

When halving happens the reward for every block mined will be reduced by 50%. This is done to prevent inflation; so, this time post-halving, Bitcoin prices will come down from 12.5 BTC to 6.25 BTC. Before the 2012 and 2016 halving incidents, Bitcoin had witnessed an unexpected rise in prices. So, it is obvious that observers feel that the same thing will happen after the May 2020 halving.

When halving occurs, the rewards will get reduced, and this means a reduced number of coins in supply. This will boost the price because of coin scarcity and the media attention will positively impact the prices. However, investors need to remember that price rises did not happen right after the halving on both previous occasions. Rather, just the opposite happened, and prices took a fall.

The upward trend came about much later; price hike had been minimal in the first couple of weeks post-halving. Data shows that large and small investors are gathering Bitcoins before the event; so there may be profit post-May 2020. Many investors like short-term traders can sell Bitcoins after the halving and this will put pressure on Bitcoin prices. On the other hand, the bitcoin trade is also increasing due to launch of automated trading bots like bitcoin loophole that help even the inexperienced to trade like a pro. When halving happens, mining costs will escalate. So, with a pull-back of prices, miners will incur losses and they will be forced to exit the industry or cut down on their operations. Some may offload holdings for covering costs and this will further cause a strain on prices. But this year is not the same as that of the previous halving events.

 In the backdrop of the deadly coronavirus attack, the Bitcoin will have the chance to show its resilience compared to other traditional assets. The pandemic has shaken the whole global economy and it has forced banks and governments to contribute to the economy. The economy was not like this during the previous halving in 2016. People today have a bigger reason to look for alternatives such as the Bitcoin which is also going to become scarcer. So, price-dips are not going to last very long this time. In fact, the chances of Bitcoin prices reaching unprecedented heights are quite strong. Investors are now searching for safe havens rather than traditional assets.

While investors may now be avoiding risks because of US government’s claims that China mishandled the virus outbreak, and prices may drop further, analysts are hopeful that the crypto coin will attain 5 figures before the halving happens.

Written by George K.

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