Bitcoin suffered a minor scare over the weekend as it predictably sold off from the $6,800 level of resistance.
It plunged to as low as $5,900 before finding a 7.68% bounce that propelled it back above $6,000 on Monday morning.
Bitcoin now needs to avoid closing daily candles and breaking below $5,900 as it would indicate that the recent downtrend is far from over and that new lows of $3,150 may be tested in the coming month,
However, Bitcoin bulls still have the opportunity to create a bullish narrative leading towards May’s halving event, which will see block rewards for miners slashed from 12.5BTC per block to 6.25BTC per block.
This has historically been bullish for two reasons; firstly it reduces the supply of Bitcoin on the market, thus naturally increasing price to rise. It is also important to consider the mining industry as a whole, if rewards are slashed then miners will need to price to effectively double in order to maintain the same levels of revenue.
A breakout above $7,000 in April could provide the ultimate platform for Bitcoin to rise during and after the halving, with some analysts suggesting that it could drive BTC to a new all-time high.
A move of that magnitude would also cause a ripple effect across all cryptocurrencies which would see the likes of Ethereum, Litecoin and XRP also surge to the upside.
While it seems straightforward, a black swan event like coronavirus has the potential to derail and rewrite any narratives that traders my attempt to set.
If cases and fatalities continue to rise then global stock markets and cryptocurrency will suffer as a result.
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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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As with any investment, it pays to do some homework before you part with your money. The prices of cryptocurrencies are volatile and go up and down quickly. This page is not recommending a particular currency or whether you should invest or not.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice.