Bitcoin is facing an uncertain weekend of price action following a gruelling week that has seen it slump dramatically from last Thursday’s high of $10,500.
At the time of writing it was trading above the $9,650 level of support after being propped up by the four-hour 200 exponential moving average (EMA).
Weekend price action is typically unpredictable with low volume, which means that values could easily slide in either direction due to a lack of liquidity.
A break down from the $9,650 level will bring price targets of $9,350 and $8,830 into the frame, while a break to the upside will undoubtedly cause a re-test of the psychological $10,000 level.
It’s worth noting that Bitcoin has surged by more than 40% since the turn of the year as anticipation builds around May’s halving event.
The halving will see block rewards for miners slashed from 12.5BTC to 6.25BTC per block, which has historically caused a surge in the price of cryptocurrencies as supply reduces while demand steadily increases.
The two previous Bitcoin halving events heralded a series of bull markets that drove the price to consecutive all-time highs.
However, Litecoin underwent a block reward halving in 2019 and it had the opposite effect with its price tumbling drastically over the following months.
Another fundamental event that could cause a surge in the price of Bitcoin is the coronavirus outbreak, which has the potential to cause an economic downturn on a global scale.
As global equities and capital markets begin to slide, traditional hedges to financial system like Bitcoin and gold will begin to soar as investors seek a safe haven.
If it can start to cycle back to the upside with a clear breakout above $10,000 and $10,500, it isn’t inconceivable to claim that Bitcoin could well test 2019’s yearly high of $14,000 over the coming months.
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In August 2008, the domain name bitcoin.org was registered. On 31st October 2008, a paper was published called “Bitcoin: A Peer-to-Peer Electronic Cash System”. This was authored by Satoshi Nakamoto, the inventor of Bitcoin. To date, no one knows who this person, or people, are.
The paper outlined a method of using a P2P network for electronic transactions without “relying on trust”. On January 3 2009, the Bitcoin network came into existence. Nakamoto mined block number “0” (or the “genesis block”), which had a reward of 50 Bitcoins.
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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice.
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