Bitcoin halving, price surge and trading opportunities
At the time of writing this BTC price is around $10,000… dropped from $10,250 twelve hours ago.. and surged $1,700 from January’s low. Bitcoin has been on a bullish rally for 3 months now and the high is almost double the six month’s low of $6,584 on December of 18th 2019. The graph shows the price variations in the last 3 months.
Bitcoin suffered its second major crash in 2019 and the price was a mere fraction of the last year’s high of $12,575 in the later months. It was supposed to be over for Bitcoin but then it started rising again and touched $10,474, three days back.
No one can predict the future of Bitcoin but can only analyse the upcoming events and facts
Roughly every 4 years, reward for mining a bitcoin transaction cuts in half. Miner receives a certain amount of BTC for solving a complex piece of problem that adds the transactions in the Bitcoin blockchain. To keep inflation in check that amount is reduced by 50% every 210,000 blocks (roughly 4 years) which makes it harder to mine and makes bitcoin more valuable as a resource, and more scarce as a commodity.
Next BTC having is scheduled to be around May, 2020
For those who need more details on halving, please go through “Cryptocurrency Halving: Explained with its impact on crypto market” .
Currently the price of generating a Bitcoin (i.e. operational costs of mining 1 Bitcoin) is around $6,500. It is expected to go up to $12,000, making bitcoin a costly asset. As the cost increases, prices are expected to go up mimicking any other commodity asset.
History shows that after previous halving of 2012 and 2016 where the rewards of mining 1 block of bitcoin transactions reduced from 50 to 25 and 25 to 12.5, (which, as of today is the case) price of bitcoin increased significantly. Effect of these halving were seen over the next 1–1.5 years. The rise in 2014 and 2017 are attributed to the halving by investors.
There have been lot of speculations around what will happen this year. Some say the price fluctuation due to halving is already in check in the current rally. Others tend to follow the historic trends and optimistically awaiting a new bitcoin market high. Whatever the future holds, its gonna be hell of a ride for Bitcoin traders around the globe.
Apart from the scheduled halving of 2020, nations around the globe are coming forth to adopt cryptocurrencies as a legal form of money in day-to-day life. Some of the key developments in 2019 are
In April, the MAS, Singapore referred to bitcoin as a digital payment token for purposes of the Payment Services Act.
In November , a legislation passed by German parliament allows the banks to sell and store cryptocurrencies starting from January 1, 2020.
In January, a law in Romania stating, income from trading “virtual currency” is classified under “income from other sources” passed
These facts are an indication that the future of Bitcoin is far from over.
Trading ecosystem has developed and matured immensely over the past 5 years. Apart from spot trading, we have exchanges offering Margined trading and Futures trading on leverages that go as high as 125x. Sophisticated algorithms are being developed. There have been a rise in the startups offering amazing services in this area.
One such startup, I work with, is Mudrex. It offers sophisticated algorithm creation tools with hundreds of indicators and signals, seamless integration with a number of exchanges including Binance, Deribit, Bitmex, Coinbase, Okex, a marketplace of algorithms designed by pro traders to choose from and a 24x7 support.
I am working on series of blog for cryptocurrency geeks covering trading methods, mechanisms, indicator theory among others on thebitcoingeek.com. Be sure to check it out in a couple of weeks:). Appreciate any constructive criticism.
Happy Trading! :)