I wrote an article a few days ago entitled Is the Mighty Bitcoin a Currency About Nothing? With the cryptocurrency surging 24% in just 3 days, it is hard to ignore its meteoric rise. The question being asked is, What is propelling Bitcoin higher? Could it be as simple as what I concluded in the article?
As long as there are people willing to buy and sell it, there is a market and in the current environment, it is clear that buyers outweigh the sellers
This type of runaway price action is normally associated with panic selling rather than buying. In this case, it seems to be a combination of both.
I have seen the term FOMO, Fear Of Missing Out, used to describe the surge in demand for Bitcoin.
I have seen other reasons given as well, such as the April halving event* and ETF demand.
However, the answer may lie in something as simple as supply vs. demand as indicated by the following from a Reuters article on Bitcoin
“70% of bitcoin supply has remained unmoved for a year, and the little that’s left is being hoovered up by the likes of BlackRock and Fidelity, just as rewards for miners are about to be slashed in half,“
As I learned in my many years of trading, it does not pay to fight the take or stand in the way of a runaway freight train but the pace of this move (see chart) should unnerve even the most savvy and experienced trader.
Markets are always in a search for equilibrium and it is no different in this case. From here, much depends on whether Bitcoin can take out its record 58.915 high and sustain it. I remains to be seen whether a lower high on Thursday (as of this writing) golds and leads to a pause.
BTC daily chart
*What is a Bitcoin halving event?
A halving occurs around every four years (or, specifically, after 210,000 blocks have been “mined.” When this occurs, Bitcoin miners see their block rewards reduced.
Bitcoin miners currently get 6.25 BTC after mining a block. After the halving event, they will receive 3.125 BTC.
At $30,000 per BTC, 6.25 would equal $187,500.
At $60,000 per BTC, 3.125 would equal $187,500
So, if I interpret this correctly, the incentive to mine more or less would depend on the price.
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