The Bitcoin prices all of a sudden above a key level of support at the $10,000 mark. It’s been quite a rise for the cryptocurrency and it’s not just Bitcoin it’s benefiting. Since the inception of digital currencies in 2008, generally speaking, as the price of Bitcoin goes, so do the prices of the thousands of other cryptocurrency projects available on the market today.
This begs the question. Why is the price of Bitcoin rallying so much well before the halving event?
In order to answer this question, investors and gamblers alike first need to know what the halving event is. Once that’s clear, putting Bitcoin’s price and context will be a lot easier. That said, it’s also important to consider the broader state of the economy, American politics and the coronavirus as reasons the price may be going up as well.
Could Market Manipulation Be a Factor?
Since December 18 of last year, Bitcoin’s price is up 68% against the American dollar. The reason for it depends on which school of thought investors want to trust. One of the most prominent whales (aka big-time investors in the industry) who goes by the name Joe007 believes the price pump is mostly a result of market manipulation. Keeping in mind that the cryptocurrency industry is still really small relative to the traditional finance market and other big industries, he may have a point.
It’s also possible the Bitcoin halving event has something to do with this. It’s estimated that the supply of Bitcoin released per block mined will cut in half once again sometime in May of this year. That means all the graphics cards and machinery used to solve blocks will have to work twice as hard to produce more Bitcoin.
In theory this means that there will be a much lower supply of Bitcoin in the market after May and thus the price will go up. But in reality what happens a lot of times is, those in the know trading with big money pump up the price well before the event happens (aka now) only to see the price dip quickly thereafter. It’s happened with the Bitcoin price in the past, and it’s also happened with other coins that go through halving events, like Litecoin for example.
Another reason some investors are skeptical is the fact that last year, Bitcoin’s price went from around $3000 all the way up to 12,000. The moral of the story is with Bitcoin sitting at just above $10,000, a lot of people think the halving event is already priced into the cost of a coin. Whether or not that’s true is something we will have to wait for in the long term.
Other Potential Reasons for the Bitcoin Price Rally
CNN estimates that over 1,000 people in mainland China have passed away due to the spread of coronavirus that has many around the world fearing a potential pandemic that will spiral out of control. Given libertarians don’t trust the government and believe in the freedom of the individual, it makes sense that many hard-core crypto investors might like the idea of keeping their finances separate from centralized organizations that might be losing control of a fast spreading end of the disease.
Reports estimate their nearly 38,000 different cases of coronavirus and it seems every corner of the globe is home to at least a few people being quarantined while trying to overcome the disease.
Controversy Surrounding Donald Trump
Investors don’t like political unrest. While they generally pull money out of the market during these times, cryptocurrency market included, for some, Bitcoin may actually be a way to keep assets safe amid all of the controversy surrounding Donald Trump and the upcoming Presidential election later this year.
Not only has Trump successfully avoided impeachment, he’ll be up for re-election as arguably the most controversial American president of all time. Add that to the U.S./China trade war that plagued the news cycle throughout 2019 and the fact coronavirus is slowing down business across Asia and now might be as good a time as any to invest in cryptocurrency.
Regardless of why the Bitcoin price is currently pumping, Bitcoiners would be well advised to take their time as they decide when to pour more money into the market. The halving is just as likely to lead to a short-term crash that will scare investors away as it is to lead to long-term gains. Play the long game.