Millions of people got economic stimulus checks direct-deposited into their bank accounts. These were sent out to lessen the impact of the COVID-19 lockdown that drove unemployment rates up to 16%. However, not all of this money went towards buying toilet paper and other necessities for the apocalypse. Some of it found its way into investments, and some of those investments were in Bitcoin. Consequently, Bitcoin has hit an April high of almost $7,800. Will it go higher?
The Bitcoin Halvening
The halvening is happening in 15 days. When this happens, the rewards paid to miners will be cut in half for each block produced. This happens every four years and is referred to by a number of names. This Bitcoin halving, or “reward drop” has historically led to increased prices for Bitcoin. In 2012, Bitcoin increased in value by just 1.7% after the halvening, but then grew 20x in value from $13 to $260 over the subsequent four months. In 2016, BTC dropped in value from $642 on July 9, 2016, the day of the halvening, to $559 on August 3, 2016. It then climbed slowly up to $637 by October 21, 2016. And then, it went bullish to almost $900 by the end of the year. If we see a similar pattern in 2020, then we can expect the price to remain relatively constant from now until a few weeks after the event, followed by a sharp drop into a bear market, and then a steady bull run a few months later. But, the externalities are different this time around. There is COVID, and there is the economic stimulus package.
To HODL or not to HODL?
If you are like most people, then you will likely consider dumping your BTC within a few weeks of the halvening. However, history shows that may not be the best path forward. Rather, it would make sense to buy the anticipated dip in early August, and to then HODL all the way until the end of the year. The stimulus package may be inflationary, meaning that fiat will be less valuable. With that in mind, BTC may increase in value substantially.
Americans are Going Back to Work Soon
New York State, an epicenter of the Coronavirus is expected to begin its tiered-reopening on May 15, 2020. When this happens, construction workers and other “non-essential” jobs will be reactivated. Money will start flowing into the economy again and people may feel more confident about spending money on Bitcoin and other investments.
Seymour Nunez is a contributing writer for Cash Tech News who enjoys writing about the intersection of blockchain technology and everyday life.
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