Very
soon, on April 19, to be exact, the long-awaited Bitcoin halving will take
place. After that, rewards to miners will drop from 6.25 BTC to 3.125 BTC per
block found.
So, how
will this shake out Bitcoin?
Many “experts” claim that after the halving, coin “creation” will slow
down, and fresh supply in the market will decrease. If demand for BTC remains
stable, its price will skyrocket.
This is
all true, but for interest in digital assets to grow, good vibes in the market
need to grow. And let’s face it, the vibes aren’t sunshine and rainbows right
now.
There
are several reasons for that:
- The stock market is in turmoil, and in such a climate, big players aren’t exactly rushing to put their money into risky assets like Bitcoin.
- Geopolitical tensions are still simmering, especially with everything happening in the Middle East. In addition, US inflation data does not point to any near-term rate cuts.
But it’s
not just the growing ties to the traditional financial system holding back
demand for Bitcoin. There are also some technological concerns.
For
example, miners could start pulling out of the BTC network due to rising mining
costs, which could slow down transaction processing and the overall speed of
the network.
How has
it gone in the past?
After
the second halving, it took three months for the asset’s price to rise just
2.6%, and in the fifth month, things started to get serious.
As for
the third halving, Bitcoin price shot up 21% in the first three
months. Not bad, but as we’ve seen, it doesn’t skyrocket overnight.
Why
things would be different now needs to be clarified. Incidents still being
determined didn’t exactly take off right after its recent halving either: it
still needs to catch up on the market.
Bottom
line?
Talk of
a surefire Bitcoin boom due to the halving? That’s
jumping the gun. There are a lot of things that have to align for that scenario
to play out.
As we’ve
seen, things still need to fall into place. Are you buying bitcoins with all
your funds before halving? That’s playing with fire, my friend.
But if
you have the guts, don’t lose sight of support and resistance levels, and, most
importantly, don’t forget to stop orders. Risk management is critical at times
like this.
Overall,
let’s hope that with the influx of smart money and the growing technical
knowledge of crypto investors, the trading game has changed, and the market is
a little less chaotic.