Bitcoin is continuing to exhibit heavy volatility this week. Early in the morning yesterday, the currency rose briefly past the $9,000 range once again, though at press time, the currency has fallen back down to about $8,700, suggesting this sudden jump hasn’t lasted.
Bitcoin Has a Brief Moment in the Sun
Bitcoin had been flirting with $10K for most of last week, trading in the extremely high $9,000 range and eventually surpassing the $10,000 mark briefly towards the end of the seven-day period. Now, however, the asset has seemingly experienced shortened momentum and fallen back by $1,000 unexpectedly.
Rich Rosenblum – co-head of trading at crypto market maker GSR – believes that heavy volatility like what crypto enthusiasts are seeing now is likely to continue throughout the month given all that’s going on in the economy. He states:
It’s likely that we’re going to see increased volatility through May, with the pandemic, ongoing stimulus measures and the halving. The record open interest for futures and options at multiple exchanges adds to this. The market is in a state of information and position overload, exacerbating the potential for volatile moves.
The good news is that post-halving rallies in the past have lasted long periods of time. According to firms like Pantera Capital, these rallies have lasted 446 days each, so despite the ugly drops we’ve witnessed over the past 72 hours, things are still likely to remain bullish for bitcoin in the coming weeks and months now that the halving has been completed.
Payal Lakhani – director of equity research and product development at CME Group – explained in a blog post recently:
So far, bitcoin’s third halving looks different to prior events and there doesn’t appear to have been such a sustained price run-up. Given the reward change has been known since bitcoin’s inception in 2009, and having already seen two such events, investors may have already incorporated the supply adjustment into their models and taken positions accordingly.
What Is the Purpose of the Halving, Anyway?
A halving occurs for bitcoin every four years. The event is designed to limit the extraction of new bitcoin blocks and prevent inflation. According to Lakhani, the effects of the halving are not comparable to those of COVID-19, which ultimately caused bitcoin to lose close to 70 percent in value as recently as two months ago.
The day is often referred to as Black Thursday. It was the day in which bitcoin fell into the high $3,000 range overnight, losing as much as $4,000 off its price as the economic conditions brought on by the present virus became worse and worse. Lakhani says that many mining operations throughout the globe have been heavily affected, with some shutting their doors for lengthy periods as bitcoin became far too expensive to mine given its lowered price.
The post Bitcoin Briefly Spikes Beyond $9,000 Only to Fall Back Down Again appeared first on Live Bitcoin News.
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