The pressure appears to be mounting again for Bitcoin. A couple of months ago they were saying ‘you’ll never get another opportunity to buy four figure BTC’, and today it is looking like dumping back to $6,000. All hopes are now pinned on the halving seven months away, but can it really prevent another bear market?
Bitcoin Breaks Lower Again
In the short term, BTC is looking bearish. Failure again to break resistance above $8,400 has resulted in another fall as BTC plunged to $8,100 a few hours ago. According to Tradingview.com it recovered slightly to trade at $8,150, just below previous support levels.
The patterns emerging on the hourly and daily charts are all bearish in the short term. A death cross is imminent on the daily chart with the 50 day MA poised to drop below the 200 day. The last time this happened was in March 2018 which led to a year-long bear market.
As reported earlier by NewsBTC a four month descending triangle has broken down into a bear flag which is all singing the same tune. A return to $6,000 is looking more likely than a rally back to five figures at the moment.
Halving To The Rescue?
The next major bullish event for Bitcoin is the block halving in May 2020. Historically there have been significant rallies leading up to these events. This was certainly the case for little brother Litecoin this year which surged 380% in six months.
Trader and analyst ‘CryptoWelson’ has been pondering the semantics of the halving and how it will affect miners’ rewards.
“1,800 #Bitcoin are mined per day. This equals a value of $15M sold to the market daily. In May 2020, the block reward cuts in half to 6.25 $BTC which results in $7.5M less needed to absorb miners’ BTC.”
As we approach the mining of the 18 millionth Bitcoin in circulation it is clear that the supply will slow down and new coins will become rarer, especially after the block halving. Additionally 85.7% of all Bitcoins have already been produced.
This leaves the current market, which is worth around $148 billion today, to be divided among all of those that want to own a bit of Bitcoin. In addition to retail investors, this group includes exchanges, custodians, institutions and even some banks.
Supply and demand dictates price and this is likely to increase next year and beyond. There is nothing else like BTC that can compete with it and institutions are clearly interested in the digital asset which has cemented itself among the traditional ones this year.
Bitcoin may have a bit of stormy weather ahead, but it has weathered those storms time and time again over its brief ten year lifespan and will continue to do so going forward.
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