The halving of 2021 is said to be a possible cause of the Bitcoin boom. The cryptocurrency has registered a bearish market for several months.
As the world was preparing for Christmas Eve, the Bitcoin market (BTC) regained its green numbers after a difficult week. The cryptocurrency recorded a price of USD 7,408 per unit at the time of writing this article, appreciating 5% in the last 24 hours.
According to the Messari platform, Bitcoin went from trading at USD 7,147 on December 22nd to trading at USD 7,408 per unit on December 23rd. The cryptocurrency managed to recover 7% of its value after having registered last December 18th its lowest price since May. Bitcoin’s price had remained at an average of USD 7,000 per unit since last week, this being the last steep rise before Christmas.
Initially, the rise in Bitcoin also affected the altcoin market, which rose in green numbers by the morning of December 23rd. However, its price fluctuated around the decline with the passing of the hours while the main cryptocurrencies (among which are ETH, LTC, BCH, and XRP) registered a devaluation of 1 and 2.
Reason for Increase in Bitcoin’s Price
The December dates have been characterized by bearish Bitcoin markets. After the great collapse in the price of this cryptocurrency occurred in December 2017, it was said that Christmas was not the best date for Bitcoin. However, all forecasts for red numbers were broken and a question arose: What could be happening in the Bitcoin market?
Although the cause for the last increase registered by Bitcoin is still not clear, several possibilities that have contributed to a market appreciation could be envisioned. For example, it might have been a correction in Bitcoin’s price. In recent months, after Bitcoin registered more than USD 10,000 per unit, its market entered a bearish season. However, the fall recorded on December 18th was very steep and pronounced even for a cryptocurrency that has oscillated between red numbers.
Market analysts, such as David Puell, note that aggressive market variations “are corrected aggressively.” In this way, the market seems to be stabilizing to find an average price after two periods with marked upward and downward trends. Puell also notes that Bitcoin is in the process of establishing a flat price, so when the price of the cryptocurrency falls too low compared to supply and demand it tends to increase volatility seeking to return to its real value.
Another event that could have contributed to the rise in the price of Bitcoin is the increasingly close date of its halving. Every 210,000 blocks, Bitcoin activates an automated process that reduces the amount of reward that miners receive for their activities to control the issuance of bitcoins.
The halving generates expectations among community members, especially during the months before this phenomenon occurs. For example, in 2016 the price of Bitcoin went from USD 400 to USD 700 before and after the reward reduction. As the next halving occurrence is increasingly close, the Bitcoin market could already be reacting to its users’ predictions.
By Willmen Blanco