In recent weeks Bitcoin (BTC) is showing impressive gains. According to analyst Jag Kooner, head of Bitfinex Derivatives, he sees similarities between Bitcoin’s price action and the upcoming halving.
4-year Bitcoin halving
First of all, it’s good to know what a Bitcoin halving contains. Miners receive rewards of “Mining‘, or discover new blocks. However, it halves every 210,000 blocks, which is approximately every 4 years. The effect of a Bitcoin halving is to reduce the number of new Bitcoins generated per new block.
The purpose of a halving is to combat inflation. There is a set maximum supply of 21 million Bitcoins, which means that mining of these Bitcoins will eventually stop. This is in contrast to what central banks can do with fiat money. The halving halves the issuance of new Bitcoins and thus also inflation. This means that Bitcoin is becoming more scarce.
Limit of $52,000 important
The important $52,000 mark has been surpassed in the last few days. Everything indicates that the rally started before the halving and analyst Kooner also confirms this:
The current market movement is consistent with that before the halving, a trend also observed in a previous Bitcoin cycle. Historically, the rally begins about eight weeks before the halving. This rally has the potential to push prices above previous all-time highs, as the past week in particular has marked Bitcoin’s rise to a trillion-dollar asset, largely due to spot Bitcoin ETFs.
Bitcoin Fund Selling Pressure Is Easing
In addition to crossing $52,000, Kooner also expects selling pressure from Grayscale’s GBTC fund to ease. Additionally, other ETFs are seeing daily inflows that would contribute to Bitcoin’s price rise.
But Kooner also warns against this Crypto Community. He points out that historical patterns can provide insight, but they are no guarantee of the future. A well-known disclaimer in the crypto world designed to keep investors vigilant.