Bitcoin experienced a huge spike in its price and reached $63,914; after the sudden surge, Bitcoin declined and is currently holding steady at $61,333, with many having their eyes on its course. This sudden increase comes amid the increasing expectations about the forthcoming Bitcoin halving happening next month. The halving goes on roughly every four years, whereby miners’ rewards for verifying transactions are reduced by half. This strategy is aimed at decreasing the supply of new Bitcoins into circulation, thus increasing scarcity while potentially leading to a higher value of Bitcoin in the long run.
According to IntotheBlock, over the historical values, BTC has always experienced a considerable price surge after every occurrence of halving. This is the pattern that got to be named, literally, “the halving effect.” Investors expect this because it is known to happen and change their investment strategy after preparing for substantial hikes in demand that will most likely come hand in hand with significant decreases in output.
However, the current cycle has produced some deviations from historical patterns. But instead of a post-halving price surge, this time, the price of Bitcoin actually started to rise earlier than expected. “This could indicate that investors are anticipating and acting upon the ‘halving effect’ well in advance.”
Analysts Predict Bitcoin Bull Trap
The crypto analyst CoinsKid has shared his insights, which are very contrasting: while most of the investors are expecting a bearish March for cryptos, CoinsKid is of the opposite opinion that there’s room for Bitcoin to make a fresh all-time high in March before the halving in April, potentially trapping bullish investors.
CoinsKid also sees a big correction post the all-time high as the halving date comes nearer. He says that during the run-up to halvings, market psychology becomes wildly bullish, and hence it’s normal to see corrections at various junctures. Recounting his earlier short experience with Litecoin during a similar market set-up last year, he remembered how he was seeking a macro correction, despite all the bullish signals.
In its chart patterns, CoinsKid sees a ‘buy the rumor, sell the news’ trading opportunity. Commenting on this, he postulated that it might just be lining up to create another much larger bull phase than most are expecting if a major macro correction aligns with the all-time high resistance for Bitcoin.
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