Bitcoin Halving
It has been quite a quiet week on the markets so far, but it has been interesting to keep an eye on the Bitcoin price in recent days and weeks because of it’s recent halving.
After every 210,000 blocks are mined, approximately every 4 years, the reward given to miners is halved.
In the past this has ended up having a positive effect on the price, and I think many traders are expecting to see the same pattern emerge this time as well.
Price Action
In my last blog post about this particular cryptocurrency, I highlighted a possible breakout that was looking increasingly likely as the price was trading in a symmetrical triangle with an ever decreasing range.
As you can see in the price chart below, the price of Bitcoin did eventually break out of this trading range, and after closing strongly above this triangle at around $8775, the positive momentum of this breakout helped the price go as high as $10,000 before it started to run into some strong resistance:
So this would have yielded some decent profits for anyone brave enough to trade this particular breakout.
Bitcoin Price Action Post-Halving
The price of Bitcoin dropped over $1000 over the weekend as traders got jittery over the high price of Bitcoin and the possible effect of the halving, but after it went through yesterday, the price has remained relatively calm, and has actually traded slightly higher.
The price has formed a base around the $8500 level and has been moving towards the $9000 level.
Furthermore, if you go back to the chart above, you can see that the long-term upward trend, as indicated by the rising trendline, remains intact.
The price has briefly dipped below the trendline but it seems to be offering strong support because it hasn’t yet closed below this line.
This will encourage many long-term Bitcoin investors, many of whom will be hoping that previous post-halving price rises will occur once again.
Final Thoughts
Whether the price of Bitcoin can break through the psychologically important $10,000 level and start a new upward trend remains to be seen, but for the time being at least, the long-term upward trend remains intact.
I still think it is too early for Bitcoin investors to relax though, particularly those who bought recently between $9000 and $10000.
If the price were to close below this trendline in the coming days and weeks, the downside potential could be significant.
We saw over the weekend how quickly the price fell $1000, and with so many traders observing this same trendline, any sustained selling pressure after a downward breakout could easily take the price back down into the $7000’s or lower.
Disclaimer:
Please remember that Bitcoin and other cryptocurrencies are highly speculative instruments, and it is possible to lose all of your capital.
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