On Thursday, Bitcoin (BTC) surpassed the $ 9,400 mark and boasted of a recovery that will affect the performance of the stock market in 2020 in many ways. D.From a technical point of view, the rise in the Bitcoin market was far above the Dow Jone Industrial Average, one of the most important barometers on the market.
In this context, it should be noted that since the approximation to the fund in 2019 of around $ 3,400 at the beginning of the year Bitcoin has achieved a remarkable recovery of over 140%. This is particularly important compared to the Dow’s increase of around 36% over the same period.
Crypto investor and analyst Alex Saunders released A tweet on Thursday comparing Bitcoin’s money performance since the beginning of the year against gold, 10-year US Treasury bills and the SP 500. Bitcoin was the best performing asset in 2020which is not an easy task to say the least.
And while this astonishing achievement is due in part to the upcoming halving, where Bitcoin’s native block reward rate is dropping 50% from 12.5 BTC to 6.25 BTC, several experts seem to agree with this idea The halving may already have been included in the price, and the recent rise may be due to investors around the world starting to see Bitcoin’s global potentialespecially in the midst of the reality of central banks, which continue to print more money out of nowhere.
To better understand this situation, Cointelegraph contacted Eric Benz, the CEO of the Changelly exchange. In her opinion Recent demand and Bitcoin’s price hike are directly related to global economic turmoil, not the upcoming halving, which is only a small part of a much larger picture. He added:
“”Confidence in the traditional Fiat system has been shaken, and events such as the halving and the global Covid 19 pandemic have further emphasized the importance of Bitcoin.. So we are experiencing another wave of adoption. “
A somewhat similar perspective is shared by Kade Almendinger, the moderator of the podcast “Darkside of the HODL Moon Cryptocurrency”, who believes this the US Federal Reserve’s recent multi-million dollar stimulus package and negative oil pricesAmong other financial uncertainties, they have been the main drivers of the recent bitcoin market recovery. He also said:
“It is not intuitive, however Bitcoin is currently both a high risk / high return asset and a hedge against inflation and financial uncertainty in other markets. And we’ll see that investors with different priorities get into Bitcoin for different reasons. “
FOMO definitely played a role
Although the recent upswing in Bitcoin has been pretty impressive, a large number of industry experts believe that this upswing was the result of the “fear of missing out” that could be translated into Spanish to fear missing out on the opportunity, and it is a term known briefly as “FOMO” Investors want to make quick profits after halving Bitcoin. On this matter, Ashish Singhal, CEO and co-founder of CRUXPay – an open source blockchain payment platform – told Cointelegraph:
“We can reasonably attribute the recent price hike to FOMO – the fear of missing the opportunity. It has been observed that the Internet search volume for bitcoin halving has increased by a large numberThis suggests that many have jumped into the market due to the positive price effects of halving bitcoin, as many experts predicted. If you see a lot of new entrants in the cryptocurrency world just before a major event, you probably think they’ll make profits quickly.“”
Similarly, Neel Popat, CEO of cryptocurrency investment platform Donut, appears to agree with Singhal’s assessment Lately, more investors have started exploring the potential of cryptocurrencies., as markets around the world have doubled with no pause in sight. He added: “M.Taking into account the patterns of previous halving, this can lead investors to believe that there is another price hike just around the corner. This supports the FOMO investor narrative“”
Bitcoin correlation to the SP 500
Speaking on April 27 during the Virtual Blockchain Week conference, Mati Greenspan, founder of Quantum Economics, said that B.itcoin currently showed the highest correlation to the SP 500. Greenspan explained this using the data derived from Coin Metrics Bitcoin and the SP 500 currently have a correlation of around 0.6 – which technically indicates a significant degree of relationship between the two products. He added that “From what has been said, nothing has become that cryptocurrencies will be our saviors” with the statement that Bitcoin is still considered one by the masses risky investment proposal.
Following the recent push that caused Bitcoin to exceed $ 9,000, Cointelegraph turned to Greenspan to determine if the correlation is still strong. On this subject, he noted:
“”The correlation has declined somewhat since mid-March, but is still quite high. The action of the past few hours is encouraging, but the short-term data are not very useful for understanding this type of correlation. It will be interesting to watch them over the coming weeks. “
Finally, he extended his views on how this recent surge could occur in such a short space of time, and suggested this Although halving played a “minor role” in this matter, the fact that the Federal Reserve and other central banks “have been pumping unprecedented amounts of cash into the economy” in the past two months has contributed significantly to Bitcoin’s drive.
Can Bitcoin keep its current momentum?
One question that has kept many people busy since the last bull run is whether Bitcoin really has the momentum to keep going. To better understand the situation, Cointelegraph turned to Bryan Hertz, the CEO of Filmio, a blockchain-based multimedia content platform. In her opinion In the short term, it wouldn’t be surprising if the cryptocurrency sector continued its current wave of financial success. However, he believes things will become much more uncertain once the halving is over:
“”After halving, it will be somewhat unpredictable, especially given the coronavirus impact on the economy, an event with black swans for which no market was prepared or safe.“”
In addition, Jason Wu, CEO of DeFiner – a decentralized finance lending platform – believes The next halving will be a change in the game as this will result in the Bitcoin network being updated., whereby old mining machines become obsolete machines and are replaced by new devices. As a result, Wu expects less energy to be used in the short and medium term, reducing the existing selling pressure on Bitcoin. With that said, he gave in:
“It will always happen. We’ll have another difficulty increase before halving, so we’ll have a decrease for BTC at this level. After that, the BTC price will go up. It will likely take a year for BTC to reach new value and the new equivalent price will be at least four times higher than the current level, which is in the range of $ 20,000 to $ 40,000“”
However, this positive outlook is not shared by Singhal, who believes that the majority of industry employees are not really celebrating this recent surge because it is simple a consequence of the expansion of the FOMO market. In his opinion, the cryptocurrency markets – along with almost all other assets – will be volatile in the short term.
Looking to the future
Although many people expected Bitcoin to suffer during the current COVID-19 pandemic, it was surprising to see this The main cryptocurrency is developing very well, not only as an independent asset, but also in relation to many traditional goods. For example, while various stock purchase options have plummeted and government budgets have been hit, The entire cryptocurrency market was able to avoid most of the negative pressurewhat gave hope to investors around the world. On this subject, Derek Muhney, Chief Marketing and Strategy Officer of Coinsource – a Bitcoin ATM service provider – said:
“I am thrilled to see how robust the cryptocurrency markets, especially Bitcoin, have been. I also believe that the massive price fluctuations have been very healthy and provide a solid foundation. […] With the rapid fall in prices in mid-March, we saw weak holders liquidate or sell their positions, while new strong holders took and bought long positions.. This gives us massive support and makes it highly unlikely that we will retest the minimum prices if there is a further drop in prices. “