After falling as low as $8,100 just an hour or two out from the halving, Bitcoin has shot back towards the daily highs. In the 30 minutes since the block reward halving came to pass, the cryptocurrency surged from $8,400 to a high of $8,825 — a bout of growth that amounts to 5%.
Bitcoin price chart from TradingView.com
With the halving having come to pass, analysts are divided over what comes next for the cryptocurrency market.
Bitcoin Volatility Is Likely to Ensue
The most common sentiment is that Bitcoin will be subject to intense volatility over the next three weeks.
In a comment made on a Bitcoin halving livestream hosted by Tone Vays — a former vice president at J.P. Morgan — prominent Bitcoin investor “PlanB” argued that he doesn’t expect an immediate rally after the halving transpires.
Instead, he argued, volatility will affect the cryptocurrency market in the short term, referencing how Bitcoin has traded at both $8,100 and $9,200 in the past six hours.
This was echoed by another top trader, who explained that it will be wise for investors to “expect high volatility in both directions in May.”
This point was not expanded upon but during and around the times of previous halvings, the crypto market was subject to volatility from a short-term time frame.
Below is a chart of Bitcoin’s price action before, during, and after the 2016 halving. As can be seen, below, the crypto asset rallied strongly into the halving, sold-off by 15% two weeks out, flatlined, then crashed four weeks later by 30% in three days.
Chart of Bitcoin’s price action before, during, and after the last halving in 2016 from TradingView.com.
Crypto Could Soon See a Quick Yet Strong Rally
Although Bitcoin has recovered strongly since the lows of today, the BitMEX funding rate — the fee that longs pay shorts to maintain their positions — recently flipped decisively negative.
The predicted rate fell under -0.20% every eight hours, suggesting that traders are currently shorting the cryptocurrency en-masse.
This led one trader to suggest that Bitcoin could undergo a “quick pump and dump to $10k,” referencing how extreme funding rates are often seen near turning points in the cryptocurrency market.
Featured Image from Unsplash
