Bitcoin is up 13% on the day, what comes next?
First it was Hive, then it was HBD, and now it's Bitcoin
Every couple of days we have a seen a nice pump somewhere, and I am not even talking about crypto wide, but just in our little ecosystem here.
Crypto wide, it's been even better with many altcoins seeing tremendous gains this past week.
But now, it's king bitcoin's turn...
It's up over 13% on the day and not showing any signs of pulling back at the moment.
Check it out:
(Source: https://www.coinbase.com/price/bitcoin)
That is nice and all, but what should we expect going forward?
I'm glad you asked!
Usually to get an idea of what we might see going forward, it makes sense to look at the past.
Historically, bitcoin has only gained 13% or more 17 other times in bitcoin's relatively short trading history. (I actually thought it would have been more than 17 times, but that is all I could find)
And when it did gain 13% or more in a single day, it tended to perform well one week out, 1 month out, and 3 months out.
Check it out:
(Source: https://twitter.com/nsquaredcrypto/status/1255579587901370374)
As you can see, the gains are nothing astronomical, at least in the short term, but it does show that large gains tend to beget gains in bitcoin land.
So, looking at the trend it make sense to just buy any weakness at this point and you should make some money over the coming month or so, right?
Not so fast...
There is one extremely large caveat to that current pattern...
"The Halving"
It sounds like some ominous horror flick, and it may turn out to be quite ominous depending on how things play out.
Block rewards are going to be cut in half, which means the break even price for miners is going to basically double overnight, that is likely going to cause many of them to turn off their machines.
When that happens hashrate will likely fall, at least in the short term before there are any difficulty adjustments.
What that means for the price is anyone's guess, but there is some evidence to point to that bitcoin may dip immediately following its halving for several weeks to several months while the miner's block rewards and total hashrate get sorted out.
That is exactly what happened during the last block reward halving 4 years ago.
We also say BCH and BSV pull back immediately following their halvings as well, though they are very different to bitcoin in terms of mining resources involved.
The big takeaway...
Past trends say bitcoin is in store for more gains ahead, however, with the halving now roughly 2 weeks away, there is the possibility that it throws a wrench in past trends.
Stay informed my friends.
-Doc
LTC did also when it halved last year.
Posted Using LeoFinance
Yep, good catch. I could see a run up into the event and then a sell off post halving that stretches out for weeks and possibly months before it ultimately bottoms. Then that becomes the spot to load up for the big one.
Kind of odd when you think about it that a halving, lowing of the inflation rate, would cause a sell off. But that is the uniqueness of POW, the miners are the ones who are instantly affected causing them to shift to something else.
Posted Using LeoFinance
Correct. Though there is no guarantee a selloff will actually occur, and if there is one, it is only initially. Medium to longer term the reduction in block rewards is overwhelmingly bullish.
I believe it went past $9,500 on some exchanges, but nevertheless, it was quite the wild ride yesterday. BTC's got some strong momentum moving forward into Halving, and I believe I saw a Tweet yesterday showing the reason for Bitcoin's massive pump - steadily decreasing supply as we get into Halving. You're spot on about the post-Halving dips though, as this has happened during past Halvings, and it'll happen again.
The only worry though - how many people are aware of that? Bitcoin's grown hugely since the last Halving, and more people are trading/investing into BTC, now more than ever. I'm just worried that there's too much hype surrounding this coming Halving, with people seemingly thinking that it'll immediately surge once it's halved. Then, once they see a bit of a dip, or that the price hasn't changed much, it'll create some unneeded FUD. I'm trying to be cautious now...
Yep, unfortunately given the price action I am seeing right now, that may have been the pre-halving top. I am positioned for a pullback in BTC at this point. That being said I took off most of my trading positions around $7,500, so I was a bit early with my call...
Yep, we're getting close to Halving now, and I do think as well that there's a slim chance to get past $9,000 before then. Though I could be wrong, as some people are expecting some heavy trading, and volatility soon as we get closer to Halving. The recent pullback to $8,500 could give some room to breathe before making a final push back to $9K, maybe?