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Bitcoin Retakes $7,000 As Cryptocurrency Market Waits for May Halvening

April 23, 2020 at 13:56 by Matt Jackson

Bitcoin is up nearly 2%, trading at $7,150, following the passing of a new US stimulus bill that will provide $480 billion to businesses and hospitals. The market is still speculating as to why Bitcoin has not performed better during the Coronavirus pandemic, but with the digital gold’s halving event due in less than three weeks, attention is once again turning to the halving event that some portions of the cryptocurrency community refer to as “quantitative hardening”.

Critics have pointed to the fact that Bitcoin should have shone through the Coronavirus, but it endured a roughly similar fate to many major markets. On March 12th, Bitcoin prices plummeted nearly 40% to a low of $3,867. Since then, digital gold has recovered some of its prices but it still comes up short of its yearly high of $10,400 posted on February.

Critics have pointed to the fact that Bitcoin was meant “to act as a safe haven during times of economic turmoil“. However, others have pointed out that Bitcoin is not a hedge against recession, but it is a hedge against inflation.

One of Bitcoin’s biggest draws is that it is a decentralized transfer of value. There are no central forces that can artificially push its price up or down. Therefore, when potential investors see banks and governments step in and effectively control fiat currency, sentiment shifts towards decentralized currencies like Bitcoin. As such, the drop on March 12th was understandable. There had been no quantitative easing so sentiment did not shift towards cryptocurrency.

The Senate passed another $480 billion stimulus package this week, which includes $320 billion for the Paycheck Protection Program, as well as money for struggling hospitals. This is believed to be an interim package, with a larger and more costly package to arrive in the coming weeks. The bill still has to receive the signature of President, Donald Trump, but this should be completed by the end of the weekend. If the theory that Bitcoin acts as a hedge against governments printing money, the cryptocurrency could be set for price gains.

Bitcoin’s third halving event is also due to take place in May. The two previous halving events have led to significant gains in the proceeding months.

However, this is the third halving, and there is an increasing belief that any price increase from the halving could have already been factored into prices and some analysts have warned that investors should not expect anything close to the 300% gains of the last halving. It seems highly unlikely that we will witness an 80x jump in price, like the one that followed the first Bitcoin halvening.

One survey points to a possible reason for Bitcoin’s struggle to perform during this time. The Economist Intelligence Unit surveyed 3,000 individuals and found that while 64% are using digital payments, only 5% said that they always use cryptocurrency for digital payments. 10% said they use crypto often. More damning was the fact that 38% of respondents said that decentralized currencies were not trustworthy, while only 26% said they were confident using the likes of Bitcoin.

One cryptocurrency that attempts to bridge the gap between trusted centralized payment systems and decentralized currency is Stellar. Through its partnership with IBM, Stellar has been used by global banks because it facilitates faster and less expensive cross-border transactions. Stellar is up more than a third from the start of the year, having posted 13% gains in the past 24 hours. It is now trading at $0.061 and investors are hoping that it can turn previous resistance at $0.055 and potentially build further support at $0.06.

At 14:30 GMT, Bitcoin (BTC) prices were up 1.69% and the world’s largest cryptocurrency was trading at $7,155.80 while Ethereum (ETH) was changing hands at $184.39, having added 3.03% to its price. Ripple (XRP), another centralized coin that provides remittance support to banks and other payment providers, was up 2.64% at $0.192. Bitcoin Cash (BCH) and Bitcoin SV (BSV), both hard forks of Bitcoin itself, were up 1.91% and 2.04% and trading at $232.74 and $192.08 respectively.

If you have any questions and comments on Bitcoin today, use the form below to reply.

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