pros and cons
Bitcoin recorded a powerful price gain of over 30% in January. The 200-day line was clearly crossed and the No.1 crypto currency reached a new 3-month high yesterday. The magic 10000 USD line is now in sight. Let’s take a look at the pros and cons.
That’s why Bitcoin could break the $10,000 mark in February
The third Bitcoin Halving Event is just around the corner and investors are focusing on “digital gold”. At the current time, the exact date for the Reward Halving cannot yet be determined exactly. Estimates vary between 55 and 100 days. Assuming the second value, the halving event would occur around 12 May 2020. However, search queries are already increasing and the term is mentioned in many media.
This is what happens after the halving
After the Bitcoin Halving Event, mining rewards will be reduced from 12.5 BTC per block to 6.25 BTC per block. This will initially affect the inflation rate of Bitcoin, which is estimated to settle at 1.8%. In addition, investors are confronted with lower supply, which should lead to a higher price if demand remains the same or increases. Over the next four years, only 900 BTC units will be mined daily. This shortage is putting the miners under increasing pressure. Competition is already fierce and about 66% of the hash rate comes from China. The Land of the Rising Sun is currently the focus of attention mainly because of other events.
The coronavirus has a negative impact on the Chinese economy and could affect the global economy in the coming months. In times of crisis, investors look for safe havens. Bitcoin and gold experienced a strong upward trend during the US-Iran crisis. Both investments are considered crisis-proof. They cannot be reproduced indefinitely and have a low inflation rate.
Another reason for a rising BTC price is the current hype. This phenomenon has been observed several times in the past. Bitcoin is approaching the magic 10000 USD mark and mainstream media are increasingly reporting spectacular forecasts. Although little is changing on the fundamentals, FOMO (Fear of Missing out) is setting in and panicky investors are afraid they will miss the next bull run.
This argues against breaking through the USD 10000 barrier
On the charts the Bitcoin is heading for a strong resistance at 9600 USD. This area turned out to be one of the most difficult hurdles before the 10k mark last year. From 9800 USD, we are looking at high demand, which could give the BTC a decisive push. In addition, one should always bear in mind how volatile the crypto market is this year as well. Whales and FUD have the potential to affect the entire market.
At this point in time, there are many indicators suggesting a sustained bull run. However, we should not make the mistake of blindly trusting the general public. Bitcoin has already recorded a price increase of over 30% this year and a longer consolidation phase would not be unusual.