Bitcoin price trades higher after yesterday’s much-anticipated halving event took place. BTCUSD is 122% higher since the March lows amid the coronavirus sell-off and is 22.63% higher in 2020.
What is The Bitcoin Halving
Yesterday occurred the third halving event for bitcoin, which means that the reward for mining each block on the Bitcoin network has cut by half for the third time in history. The previous Bitcoin halving event occurred on July 9, 2016, and the first one took place in November 2012.
The 2020 halving event reduced the reward for unlocking a “block” on the Bitcoin network from 12.5 new coins to 6.25.
Halving was embedded into the Bitcoins code to control the inflation in the Bitcoin market. The rewards to bitcoin miners will continue to halve every 210,000 blocks until they reach zero in about two decades’ from now, limiting the total number of Bitcoins that will ever exist to 21 million.
Bitcoin advocates support that this scarcity is part of what underpins bitcoin value and makes it a potential safe haven against currencies that are vulnerable to devaluation during times of economic crisis.
From the fundamental point of view, the halving event is bullish for the bitcoin price, but investors should also take consideration of more factors to forecast the fair value of bitcoin, such as the supply and demand, the interest rates, and the acceptance os bitcoin as payment method around the globe.
Download our Q2 Market Global Market Outlook
Bitcoin Price Technical Analysis After Halving
Bitcoin price is 2.19% higher at $8,759 reversing four days losing streak. Investors took some profits off the table ahead of the halving event to avoid a negative surprise. The last month Bitcoin gained over 27%, and that return is attractive for some investors and locked their profits as many analysts expected high volatility ahead of halving.
The technical outlook remains bullish despite the recent pullback from two-month highs. Long positions can sit comfortably as long as the price trades above the 200-day moving average at $8,041.
In the daily chart, we can see today a small green candle after four large red candles while the RSI (14) seems to reverse its downward direction indicating a fresh wave of buyers.
On the upside, initial resistance stands at $8,834 the daily top. The next resistance for BTCUSD will be met at $9,173 the high from yesterday’s session. In case of a break higher, then the bulls will be looking for an extension above 10,073 the high from May 7.
On the other side, initial support for BTCUSD stands at 8,534 the daily low. The next important level to watch in case of further selling pressure is at 8,170 the low from yesterday’s “halving” trading session. Bears will be back in control below the 200-day moving average at $8,041.