TECH

Bitcoin reaches $10,000 mark on the eve of halving

Bitcoin rose this week, reaching $10,000 and accelerating the market ahead of the long-awaited halving next week. The value of the cryptocurrency has now recovered from all its losses caused by the coronavirus - which have reached almost 40% since January - and is on track to become one of the best performing assets of the year.
However, with bitcoin's imminent halving, some warned that the price could be approaching an abyss. "With bitcoin halving coming quickly, we believe that a short-term downturn is highly likely immediately after halving, as traders start to profit," said Lennard Neo, head of research at the institutional bitcoin fund Stack, based on Singapore.
Next week's bitcoin halving, the third since the coin was created more than a decade ago, is scheduled for May 12 and will cause the number of bitcoin rewarded to so-called miners, who maintain the bitcoin network, to be halved - from 12.5 bitcoins per mined block to 6.25.
No one knows how the bitcoin price will react to next week's tightening of supply, although most bitcoin traders and investors are confident that the value will eventually rise.
"In the long run, we can expect bitcoin to rise significantly in late 2020 and early 2021," said Neo, adding that "more turmoil in the larger economies" could "accelerate bitcoin's upward trajectory".
Global stock markets have recovered sharply since the coronavirus-induced liquidation in March, driven by a major US-led monetary and fiscal stimulus. However, there may be new problems on the horizon, with investors nervously watching how countries will manage the virus when quarantine restrictions begin to ease.
Meanwhile, another 3.2 million Americans sought unemployment benefits last week, bringing the total number of claims since mid-March to 33.3 million - about 20% of the US workforce.
The bitcoin options market is also showing warning signs in the race for halving. "After the increase in volatility after the great fall in March, the gradual and steady recovery has led to implied volatility to calm down," said James Li, data scientist at bitcoin analysis and cryptography company CryptoCompare, pointing to option contracts. of bitcoin from the crypto exchange Deribit in Panama. “However, with the strong rise we saw in late April, the market now expects more volatile movements before and after halving, regardless of direction. Long-term expirations in September and December did not see a very strong reaction, suggesting that volatility should be mitigated in the long run after halving ”.
Some investors believe that bitcoin halving, a well-wired event that has been on the roadmap since bitcoin was created, has already been “quoted”. "We hope that the halving effect has already happened, which means that this 2020 event will be anti-climatic for many," said Ed Hindi, of the London-based crypto fund Tyr Capital. "We may see the market drop 25% to 35% from the peak, but we expect it to be followed by a period of trading with limits over several months and then a gradual move back," said Hindi, adding that “the long-term horizon for bitcoin is extremely optimistic”. He even predicted a price target of $100,000 to $125,000 for bitcoin in the coming years.
Wayne Chen, founder of Coincurve, a Vancouver-based bitcoin exchange, echoed others in the bitcoin industry. "There is a possibility that prices could be negotiated laterally or even drop slightly after half," said Chen. “With the Covid-19 pandemic as an additional detriment to the world economy, we can see an upward sign faster than previous halvings.” 

by Billy Bambrough