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Key Takeaways
- Bitcoin moved above $65,000, recovering from earlier losses, ahead of its highly-anticipated halving event and amid investor concerns about geopolitical tensions.
- Recently launched spot Bitcoin ETFs have helped propel Bitcoin’s price to a record high before the halving event, an occurrence that has never happened in Bitcoin’s 15 year history.
- Bitcoin’s price successfully held above the key $60K and 38.2% Fibonacci level following Israel’s retaliatory attack against Iran, indicating that recent geopolitical tensions may already be factored into the price.
Bitcoin (BTC), the largest cryptocurrency by market capitalization, surged above $65,000 Friday morning, paring earlier intraday losses ahead of the highly anticipated halving event that’s expected to take place either today or tomorrow. The price had fallen below $60,000 earlier following overnight news that Israel had retaliated against Iran for its weekend drone and missile attack.
In the pioneer cryptocurrency’s Olympics moment, Bitcoin will undergo its one-in-every-four-year halving, in which the digital asset’s block reward reduces from 6.25 to 3.125 bitcoins, an event that historically increases its value in the months following amid fewer coins entering circulation.
However, Bitcoin has fallen as much as 19% from its record high of $73,835.57 on March 14, with some analysts saying the sell-off indicates the cryptocurrency’s halving has already been factored into the current price. They argue that recently launched spot Bitcoin exchange-traded funds (ETFs) have improved the asset’s pricing efficiency and propelled the cryptocurrency to a new record high prior to the halving—an occurrence that has never happened in Bitcoin’s 15-year history.
Market commentators also point out that current macroeconomic conditions are significantly different to the three occasions when Bitcoin has halved since 2012, which were characterized by low interest rates and low inflation compared to today’s higher rates that make risk-on assets, such as cryptocurrencies, less attractive.
Bitcoin bulls concede that intuitional investors have driven the recent rally, but anticipate sentiment to turn bullish after the halving, which they believe will attract new retail traders. “While the recent rally has been led by institutional investors, with past halvings we’ve seen a positive sentiment shift in the market that attracts new retail traders; I think the cycle will repeat itself,” Cash App’s Miles Suter told CoinDesk.
Taking a look at the charts, Bitcoin’s price consolidated within a symmetrical triangle throughout March and early April before breaking down from the pattern late last week, with sentiment remaining bearish ahead of the halving.
Looking ahead, investors should monitor if the legacy cryptocurrency can hold above the psychological $60,000 level, an area on the chart where the price also finds support from the key 38.2% Fibonacci retracement level, when using a grid stretched from the Jan. 23 low to the March 14 high. Interestingly, BTC tested this level key early Friday morning after news surfaced of Israel’s retaliatory attack on Iran but found immediate buying interest, indicating recent geopolitical tensions may already be factored into the price.
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