TECH

ANALYSIS-Bitcoin rally after halving could take time, investors say

Investors who are expecting a sudden rise in the price of bitcoin, after halving three weeks ago, may have to wait a few months, or perhaps a few years.
Bitcoin is trading at low volatility after going through the third halving on May 11, which has reduced the rewards given to those who "mined" bitcoin to 6.25 new currencies, up from 12.5 previously.
There were expectations that bitcoin would rise, similar to what happened after the two previous halvings, as this adjustment effectively decreases its offer.
The virtual currency has gained 11% since the adjustment, but has had more days of poor performance than days of bullishness and analysts said the overall technical momentum was negative. In contrast, bitcoin rose more than 40% from January this year to halving.
As of Friday, bitcoin was down about 1% to $9,679. He topped $10,000 twice after halving, but backed off when he encountered resistance at that level.
"Bitcoin is on a seesaw," said Nicholas Pelecanos, head of trading at NEM Ventures. "On the one hand, we have technical and network data; on the other, solid fundamentals and a correlation with US stock indexes."
The first halving, in November 2012, catalyzed a bitcoin recovery that went from $10 to $1,160 in 12 months. The second, in July 2016, saw bitcoin jump more than 300%, from $650 to $2,800 in the same period.
"It can take six to 12 months for investors to reap the rewards of bullish movements after halving," said Lennard Neo, head of research at Stack Funds.
"In reality, there is a significant time lag between the event and the establishment of a renewed market balance based on general supply and demand," he added.
As miners' profits decreased by 50%, halving affected the bitcoin supply side and increased the time needed for them to find their break-even point.
Once this is found, said Stack's Neo, bitcoin is likely to carry out its "halving-induced" price appreciation. 

By Gertrude Chavez-Dreyfuss