Bitcoin price watch: 5 days til halving
It's now less than a week until the Bitcoin halving, how is the price reacting?
The fourth Bitcoin halving is almost upon us, and true to form, volatility has returned to the crypto markets.
As we mentioned last week, history shows that the Bitcoin price is reliably unpredictable around the time of the halving.
The latest halving has proved to be no exception, after Bitcoin dropped from more than US$70,000 to around US$61,800, before bouncing back to US$65,000 over the course of the weekend.
Why did Bitcoin crash?
The obvious (and likely) explanation is the escalation of the conflict in the Middle East.
As cryptocurrency markets never close, crypto has always been particularly jittery in how it reacts to significant global events.
While the Covid crash impacted all markets, it was crypto that saw the most dramatic drop, as well as the most dramatic recovery.
What happens next?
Your guess is as good as anyone's, but history again would suggest we're not yet out of the volatility woods.
Wild price swings have been a regular occurrence around Bitcoin halvings, but so has serious price appreciation in the year or so following each halving.
If we see the same thing this time around, the next 12 months could be very interesting.
"What's particularly exciting about this halving is that we are seeing Bitcoin hitting all time high prior to the halving event, as well as new inflows from traditional financial markets that are in no small part due to the US approval of spot BTC ETFs in January," said Ben Rose, Binance ANZ general manager.
"So when you combine that new interest with the increase in retail demand we've tended to see after previous halvings, you have a potentially explosive combination."
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