Hong Kong: Excitement over Bitcoin’s upcoming halving and an overall risk-on environment are pushing up cryptocurrencies, with the largest token reaching its highest level since before the coronavirus-induced crash.
Bitcoin gained as much as 1.9 per cent to $9,099 Thursday as of 11:30am in Hong Kong after jumping 15 per cent on Wednesday, according to composite prices on Bloomberg. (Other cryptocurrencies also advanced, with Bitcoin Cash and Litecoin both up a third day.)
Cryptocurrencies have moved in tandem with riskier assets - stocks are up more than 30 per cent - over the past month but many crypto fans are also pointing to Bitcoin’s so-called halving, which reduces the number of rewards miners receive. Ahead of the token’s last two halvings (it’s sometimes referred to as a halvening), it surged, with some enthusiasts positing the same could happen this time around.
Some doubt the surge
“The Bitcoin halving in under two weeks may explain some of the bullish activity by speculators,” Craig Erlam, senior market analyst at Oanda, wrote in a note. “But you have to think that an event that has been in the diary for so long will already be priced in. This could see some of these moves faded as we hit halving day.”
However, with Wednesday’s jump above $8,000, the largest cryptocurrency entered overbought territory based on the GTI Global Strength Indicator. (Assets are considered overbought if the reading exceeds 70 and could indicate that it may be difficult for the token to notch additional gains in the short-run.)
According to Nemo Qin, senior analyst at eToro, “It seems the Bitcoin halving is starting to have an impact on price. I expect Bitcoin will test the $9,000-$10,000 range again prior to the halving.”
According to Christel Quek, chief commercial officer and co-founder at Bolt Global, “This is an unprecedented time as liquidity remains a priority for investors fleeing equity markets. Therefore, while Bitcoin should rise into $10,000s after the halving, it could be followed with a price drop as investors engage in profit taking.
“No level of technical support can stand when the economy is drained.”
We are still watching closely and believe the sentiment is not yet bullish. I expect Bitcoin will see more trading activity around the halving - most likely 'buy the rumor, sell the news'. Our portfolio companies are reporting high volumes of inbound from firms looking to access Bitcoin markets - but the volume is largely in derivatives.”