Bitcoin is maintaining its position above $9,000, a level it broke above earlier this week and staying strong here. Already, this strong move that broke the downward channel and 200 DMA has the weak hands out of the market.
“So I think we’ve just got rid of a lot of people, and what that means is weak hands are out. There is nothing more bullish to a market when you have a lot of bulls who are basically sold out,” said veteran trader Peter Brandt.
According to investor and trader Josh Rager, even if the price drops at $7,900-$8,000 level, this will scare people but would give a solid bounce at point of control.
“Price rejected off $9500 (as expected) & if a pullback comes, watching $8700-$8800 for a bounce,” he said.
Moving Closer to Gold’s Level
But things are about to get even more exciting as the date of the much-awaited Bitcoin halving keeps on coming closer. Now, it is less than 100 days away. This halving is scheduled to occur in May as the Bitcoin block mining reward halves every 210,000 blocks.
It is possible that the halving would come sooner because bitcoin miners are adding a lot of hash power to the network that has the hash rate jumping to a new all-time at 123 Th/s on Jan. 29. In order to keep up with this, difficulty adjustment is also hitting ATH at 15.4 trillion.
A few days might be here and there but the point is this time the reward will be reduced from 12.5 BTC to 6.25 coins.
Apart from this cut in rewards, there would be a supply shock as bitcoin inflation will be reduced from 3.68% to 1.80%, which is not only less than that of gold but also the targeted 2% of Federal Reserve.
Another exciting thing to happen with this halving is the S2F ratio of the digital asset that will double to 50. This would make bitcoin the second asset after only gold to have such a high S2F ratio.
Currently, BTC has an S2F of 25, closer to Silver’s 22 but the third halving will move it closer to gold’s 62.
But how the market will value it?
Now, as prominent analyst PlanB says the real question is how the market will value it. Bitcoin has already spiked over 27% in YTD.
Historically, we have seen the halvings correlating with a significant increase in the crypto asset’s price. However, some of the crypto community members believe this known event is already priced in.
But a good chunk of people still has bullish expectations from the event. Recently, PlanB conducted a poll on Twitter to ask the community if Bitcoin’s “halvening” won’t boost its price or cointegration between the price and stock to flow model will stay intact and drive bitcoin price?
The majority, 65.3% of the total 7,533 voters were in favor of Bitcoin price to rocket because of halving while 22% have no idea. Only 12.7% sees it as a non-event.
It happened in the past, it will “absolutely” happen again
Weiss Crypto Ratings is among that chunk who believes in the halving induced bull run. The firm that rates crypto assets says halvening will “absolutely” drive the BTC prices higher, the question is how much higher.
Halving, it says has always ushered in explosive price increases. And because of that upcoming surge, miners have been increasing their hash power to grab as much BTC as they can before the reward gets cut in half.
“The May halving event IS likely to trigger a major new surge in the price of Bitcoin and most other cryptocurrencies. It’s hard to imagine a scenario in which BTC does NOT rise to new, all-time new highs, easily surpassing the $20,000 level,” said Weiss Crypto ratings.