US benchmark index, the Dow Jones Industrial Average Index, or the DJX, started the week low. After a steady run for almost three days in a row the previous week, and closing in the greens, it is now 200 points down within the first hour of open. Bitcoin has a strange affinity of correlating with the movement in the Dow.
Bitcoin enthusiasts would have heard about the upcoming halving event. Its founder Satoshi Nakamoto came up with the idea of reducing the number of Bitcoins awarded per block mined. This event takes place every four years. It ensures that only a limited supply of BTC remains in circulation.
What does Bitcoin-halving or halvening mean?
Miners mine Bitcoin blocks. Miners are people who participate in the blockchain network by lending a part of their computing power to the network. These miners do not work for free. They are rewarded with Bitcoins for every block they mine.
The Bitcoin algorithm works in such a way that once every 210,000 blocks are mined, the rewards get halved. The current prize is 12.5 BTC. Post the halving, it will be reduced to 6.25 BTC.
Source: TradingView.com
The last Bitcoin halving occurred in 2016. Post the halving, BTCUSD shot up multiple times, making it the highest growing asset of the previous decade. Here is the weekly chart for BTCUSD after the last halving.
Post the auspicious event last time, BTCUSD increased more than 3000%. Yes, you read that right!
Is it the right time to invest in BTC?
Several bloggers and cryptocurrency websites claim how Bitcoin can exponentially increase in value, post the halving. And these reports have served their purpose. Several new investors flocked the BTC trading exchanges to get a piece of the BTC pie.
So much so that even Paul Tudor Jones, the billionaire hedge fund investor, revealed that he has BTC investments in his portfolio.
However, things might not be as sparkling for BTCUSD as some make it seem. History shows that when one million people lose their livelihoods at once, it is the economy that takes a hit. The COVID-19 pandemic has taken away the jobs of more than thirty million people in the United States alone. Nobody understands what its implications could be.
In times of a crisis, one needs to safeguard their investments. Bitcoin currently does not have any commercial usage.
Technical analysis of BTCUSD, and the price analysis
Let us look at the BTCUSD-daily timeframe. Source: TradingView.com
BTC is already touching the Exponential Moving Average of the Bollinger bands. It would act as temporary support for Bitcoin. However, if prices continue to fall, BTCUSD could reach $6,802.
On the upside, if bulls take charge and Bitcoin gets a momentum push, it could reach $10,000 post the halving. Only time would reveal what’s in store for Bitcoin.
