BTC/USD Outlook
With the BTC halving but a few days away, most investors and traders are sitting on the edge of their seats in anticipation. This event couldn't have come at a more precarious time, given the current Covid riddled economy. So now the question begs, what should investors expect in the coming months? While past having events seamed to catalyze a period of bullish activity, such a thin track record can not be labeled a pattern. However, the economics of such a halving event are very clear and predictable.
General economic theory states that if supply gets cut in half and demand stays the same then the price should rise. While this is certainly true, I don't see it as the real value proposition behind the halving event. Currently, miners are forced to sell almost everything they mine to cover their operating costs. When the amount that they mine (produce) gets cut in half, it in turn cuts in half the amount they can dump on the market. This drastic reduction in selling pressure on the market is bound to drive the price up. Additionally, if the price begins to strongly trend upwards, many miners are more likely to take on debt to finance their operations due to the opportunity cost of selling the asset as soon as it is mined. This once again reduces the selling pressure on the market as no one wants to tell during a bull market unless they have to.
I could go on and on about the potential impacts of the halving event, but the real question is, how do we predict the price movements caused by it? Well, form a charting pattern perspective, it looks like we have been forming a massive bullish pendent since 2017 that is primed to break out. While the recent break above the 200 daily MA is certainly a bullish indicator, I would watch for a break above 10k, this will violate the structure that we have been stuck in for the past few years.
General economic theory states that if supply gets cut in half and demand stays the same then the price should rise. While this is certainly true, I don't see it as the real value proposition behind the halving event. Currently, miners are forced to sell almost everything they mine to cover their operating costs. When the amount that they mine (produce) gets cut in half, it in turn cuts in half the amount they can dump on the market. This drastic reduction in selling pressure on the market is bound to drive the price up. Additionally, if the price begins to strongly trend upwards, many miners are more likely to take on debt to finance their operations due to the opportunity cost of selling the asset as soon as it is mined. This once again reduces the selling pressure on the market as no one wants to tell during a bull market unless they have to.
I could go on and on about the potential impacts of the halving event, but the real question is, how do we predict the price movements caused by it? Well, form a charting pattern perspective, it looks like we have been forming a massive bullish pendent since 2017 that is primed to break out. While the recent break above the 200 daily MA is certainly a bullish indicator, I would watch for a break above 10k, this will violate the structure that we have been stuck in for the past few years.
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