Bitcoin’s price jumped above $8,100 on Wednesday, making an April gain for the fifth consecutive year all but certain.
The top cryptocurrency by market capitalization rose to $8,191 at 11:15 UTC, its highest level since March 10, according to CoinDesk’s Bitcoin Price Index.
At press time, bitcoin is hovering near $8,170, representing a 4.5% gain on the day. Prices are now up 26% on a month-to-date basis and 13.6% year to date.
An April gain would be confirmed if prices
hold above $6,428, the monthly opening price, through Thursday’s UTC close.
While a price pullback in the next 24 hours cannot be ruled out, a drop all the way back to levels under $6,428 looks unlikely, as technical studies are biased bullish and the speculative buzz surrounding the upcoming mining reward halving is likely to limit any losses.
So, bitcoin looks set to end April in the green, having put in a positive performance in the same month over the last four years.
Bitcoin has performed well in April in six out of the last eight years. The cryptocurrency suffered moderate losses in the two down years.
Best performing asset
Bitcoin’s price performance looks more impressive if we take into account the fact that it’s outshining other major assets by big margins.
While the cryptocurrency is up over 25% for the month, gold, the classic safe haven asset, has gained 6.4%. Meanwhile, the S&P 500, Wall Street’s equity index, has risen by 10.8% so far in April. The dollar index, which tracks the value of the greenback against major currencies, is reporting marginal gains.
Meanwhile, the West Texas Intermediate crude, the North American oil benchmark, is down 36%. Oil prices collapsed earlier this month as the massive demand fall-off caused by the coronavirus outbreak saw storage facilities at full capacity across the globe.
Bitcoin was widely expected to print gains in the run-up to halving event due in 12 days. Matthew Dibb, co-founder and COO of Stack Funds, told CoinDesk on April 1 the halving event would create upward pressure on bitcoin’s price. “Investors will take up positions in anticipation of rapid appreciation post-halving,” Dibb said.
Bitcoin undergoes the halving every four years – a process aimed at controlling inflation by reducing block rewards for miners by 50 percent.
There’s also been a general consensus in the market that bitcoin will rise in April on the back of the unprecedented monetary and fiscal stimulus lifelines launched by authorities across the globe to contain the economic fallout from the coronavirus outbreak.
Both the stimulus billions and the bullish halving narrative may continue to bode well for bitcoin in the short-term. Some analysts expect the cryptocurrency to rise as high as $10,000 ahead of the reward halving.
Post-halving, though, the cryptocurrency may face selling pressure. “This time, news that the bitcoin halving is happening is widely known, it’s less likely that it will drive prices upwards as much as it did the last time,” said Andy Ji, Co-founder of Ontology, a public blockchain and distributed collaboration platform.
Indeed, the halving has been extensively discussed for more than a year and the market may have largely priced it in. As a result, “sell the fact” trading may be seen after May 12.
Cutting the block rewards by half also means miners will have a tough time making a return on their investments. Thus, if prices fail to rally, some miners may exit the market and offload their holdings to cover costs, leading to a deeper slide in prices.
It’s worth noting that the 2012 halving was followed by an immediate 10% sell-off, while a 38% decline trailed the 2016 event.
Disclosure: The author holds no cryptocurrency assets at the time of writing.
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