In recent weeks Bitcoin (BTC) is showing amazing gains. According to analyst Jag Kooner, Head of Bitfinex Derivatives, he sees similarities between Bitcoin's price action and the upcoming halving.
Will this inflation shock cause trouble for Bitcoin's upside?
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Bitcoin news
Halving Bitcoin for 4 years
First, it's good to know what a Bitcoin halving It includes. Miners get rewards by “Mining“, or the discovery of new blocks. However, it is halved every 210,000 blocks, which happens approximately every 4 years. The effect of the Bitcoin halving is to reduce the number of new Bitcoins that are created for each new block.
The purpose of the halving is to combat inflation. There is a maximum supply of 21 million Bitcoins, which will eventually stop mining them. This is in contrast to what central banks can do with paper money. Halving halves the issuance of new bitcoins, thus also inflation. This means that Bitcoin is becoming more scarce.
The $52,000 limit is important
In recent days, the important barrier of $52,000 has been crossed. All indicators point to the rally starting before the halving, and analyst Conner confirms this as well:
The current market movement is in line with the pre-halving, a trend that was also observed in the previous Bitcoin cycle. The rally historically begins about eight weeks before the halving. This rally has the potential to push prices above previous all-time highs, with last week in particular seeing Bitcoin rise as a trillion-dollar asset, driven largely by spot Bitcoin ETFs.
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Bitcoin news
Selling pressure from Bitcoin fund decreases
In addition to crossing the $52,000 mark, Conner also sees selling pressure easing from Grayscale's GBTC fund. Furthermore, daily inflows are being seen in other ETFs, which may contribute to the rise in Bitcoin prices.
But Conner also warns encryption Community. He points out that historical patterns can provide insights, but they do not guarantee the future. A well-known disclaimer in the world of cryptocurrencies, intended to keep investors alert.
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