It has been a roller-coaster ride for Bitcoin and crypto assets in the last few weeks. After peaking in February at $10,500, the coin fell to $3,800, and at spot rate, the coin has rallied over 60 percent to slightly above $7,000.
BTC Price Fluctuation
$7,000 is a level that is watched closely by chartists and day traders looking to clip the market for quick gains.
The level is important for investors and swing traders who remain disillusioned by heavy swings in prices a few weeks before halving.
Already quite a year for bitcoin:
>$10k in February
Briefly <$4k in March
On a three weeks high this morning back >$7k pic.twitter.com/pVYE2pWePq
— skew (@skewdotcom) April 6, 2020
It is exactly 38 days to Bitcoin halving and a few weeks before Bitcoin Cash and other iterations of Bitcoin to slash their miner coin rewards.
It could spell a disaster to some and for established networks with participants across the board, it could be a boon, a new era of success.
Bitcoin will be easily pumped after Halving
Since rewards will be slashed, it is the opinion of the creator of Stock-to-Flow (S2F), PlanB, that Bitcoin prices, going forward, will be easily inflated and for longer.
In his analysis, for the BTC price to be maintained above $7,000, $400 million of cash inflow was required at current emissions.
However, once halving happens, half of that cash, $200 million, will be required to keep Bitcoin at over $7,000.
If history leads and current BTC prices are about to rally as a result, not only is the coin about to post massive gains with minimum effort but the price will likely soar above Feb 2020 highs.
“To maintain $7000 since Oct 2017, Bitcoin must have had about $400M new cash inflow every month last 2.5 years! (30d x 24h x 6blocks x 12.5btc x $7k assuming all trading is zero sum game) After the halving, we only need $200M per month to keep $7k level. If $400M stays, then Bitcoin will sky rocket.”
To maintain $7000 since Oct 2017, #bitcoin must have had about $400M new cash inflow every month last 2.5 years! (30d x 24h x 6blocks x 12.5btc x $7k assuming all trading is zero sum game)
After the halving, we only need $200M per month to keep $7k level. If $400M stays, then ? pic.twitter.com/d6hYJqxIUr
— PlanB (@100trillionUSD) April 6, 2020
Investors are Defensive
Still, there are doubts about whether this rally will be sustained regardless of the halving event.
Bitcoin, just like all investments, is weathering a crisis. The disruption caused by COVID-19 is forcing investors to be defensive, and most prefer to hoard cash and purchase essentials instead of investing.
In the case of a lock down, the odds are that liquidity will dry up because of investor preference, causing more price fluctuations.