After attempting to reclaim the $9,000 level a couple of times with no success, the bulls finally gained enough momentum to push the price slightly above $9K on March 5. Bitcoin (BTC) hit a local high of $9,137 a few hours ago. The gains came as US stocks tanked following an increase in coronavirus cases in the United States which even prompted California governor Gavin Newsom to declare a medical state of emergency. Moreover, new cases have also been reported in China, the epicenter of the epidemic.
Interestingly enough, this bitcoin price rebound comes as halving draws closer. The event is now less than 10,000 blocks away. Is the bitcoin (BTC) price party just getting started ahead of rewards halving?
Bulls Are Unstoppable As BTC Obliterates $9,000 Barrier
The last couple of weeks have been a rollercoaster for global markets due to the coronavirus crisis. Although the US stock market had attempted a recovery yesterday, the bullish momentum waned on Thursday after reports that there is an unexpected increase in new cases of coronavirus infections in China. This immediately crushed all hopes that China had somewhat contained the epidemic.
Back in the United States, more cases have been reported bringing the death toll to 11, along with at least 154 confirmed COVID-19 cases. Governor Gavin Newsom declared a state of emergency after the death of a 71- year old man who was onboard the Grand Princess cruise.
For this reason, the Dow Jones plunged by more than 600 points today despite a surprise rate cut of 50 basis on Tuesday. Bitcoin, on the other hand, is showing new signs of life as it recaptured $9,000. BTC has surged 4.43% in the last 24 hours to trade at $9,124.24. Other cryptocurrencies are also in the green territory. ETH, XRP, and BCH are up by 4.40%, 3.76% and 7.74% respectively.
Bitcoin Halving Is Less Than 10,000 Blocks Away
According to bitcoin core developer Jimmy Song, the bitcoin halving is presently less than 10,000 blocks away. The bitcoin protocol is designed in such a way that after 210,000 blocks (roughly four years), rewards for bitcoin miners are slashed by 50%. This year, miners’ rewards will decrease to 6.25BTC which means that the price will have to rise so as to keep the miners in profit even with the halved rewards.
In addition, bitcoin’s inflation rate will also be halved from the current 3.6% to 1.8%. A low inflation rate, coupled with a hard-capped supply of 21 million is likely to nudge the prices higher. This is why most crypto observers are enthusiastic about the event.
A Pre-Halving Rally Brewing?
In the two previous halvings, bitcoin witnessed momentous growth in value prior to and months after halving. Bitcoin being a highly volatile asset, it is quite difficult to predict if it will behave exactly the same way this time around. Yet, this year looks quite promising. As governments continue to cut interest rates and print money in efforts to shield economies from the consequences of the novel coronavirus just days before halving, bitcoin is likely to continue on an uptrend.
Morgan Creek’s Anthony Pompliano put it nicely in a note to investors:
“The rate cuts and subsequent money printing is going to occur within months of the Bitcoin halving. So while the fiat currency world is accelerating the devaluation of their base unit of account, Bitcoin will be programmatically increasing the scarcity and value of their base unit of account. You literally can’t make this type of stuff up. Cut rates. Print money. Watch Bitcoin’s supply shock occur.”
Also, widely-followed analyst PlanB, the creator of the Stock-to-Flow model recently pointed out that he expects bitcoin (BTC) to behave the same way it did with the 2012 and 2016 halvings.
In a follow-up tweet, he reiterated that he sees Bitcoin (BTC) crossing the $100,000 mark before December 2021.