(Bloomberg) — Excitement over Bitcoin’s upcoming halving and an overall risk-on environment are pushing up cryptocurrencies, with the largest token reaching its highest level since before the coronavirus-induced crash.
Bitcoin gained as much as 1.9% to $9,099 Thursday as of 11:30 a.m. in Hong Kong after jumping 15% on Wednesday, according to composite prices on Bloomberg. Other cryptocurrencies also advanced, with Bitcoin Cash and Litecoin both up a third day.
Cryptocurrencies have moved in tandem with riskier assets — stocks are up more than 30% — over the past month but many crypto fans are also pointing to Bitcoin’s so-called halving, which reduces the number of rewards miners receive. Ahead of the token’s last two halvings (it’s sometimes referred to as a halvening), it surged, with some enthusiasts positing the same could happen this time around.
“The Bitcoin halving in under two weeks may explain some of the bullish activity by speculators,” Craig Erlam, senior market analyst at Oanda, wrote in a note. “But you have to think that an event that has been in the diary for so long will already be priced in. This could see some of these moves faded as we hit halving day.”
Read more: Get Set for Bitcoin ‘Halving’! Here’s What That Means: QuickTake
However, with Wednesday’s jump above $8,000, the largest cryptocurrency entered overbought territory based on the GTI Global Strength Indicator. Assets are considered overbought if the reading exceeds 70 and could indicate that it may be difficult for the token to notch additional gains in the short-run.
“We are viewing the incredibly volatile trading range since 2018 as a longer-term basing/consolidation profile that has bottomed near its long-term uptrend (200-week moving average) and will likely resolve the bigger multiyear pattern to the upside over the coming two to four quarters,” said Rob Sluymer, managing director of technical strategy at Fundstrat Global Advisors LLC.
Here’s what other market watchers are saying:
Nemo Qin, senior analyst at eToro:
“It seems the Bitcoin halving is starting to have an impact on price. I expect Bitcoin will test the $9,000-$10,000 range again prior to the halving.”
Christel Quek, chief commercial officer and co-founder at Bolt Global:
“This is an unprecedented time as liquidity remains a priority for investors fleeing equity markets. Therefore, while Bitcoin should rise into $10,000s after the halving, it could be followed with a price drop as investors engage in profit taking,” said Quek. “No level of technical support can stand when the economy is drained.”
Charles Hayter, co-founder and CEO at CryptoCompare:
“The crypto market in 2020 is very different from previous halvings, and the impact of miners selling their Bitcoins differs substantially this time around. This will likely dampen the post-halving impacts from miner selling,” he said. “The impact of Covid-19 so close to the halving and Bitcoin’s correlation to equity markets means we may not see significant surges in price due to the halving.”
Zac Prince, co-founder and chief executive officer of BlockFi:
“May’s halving is a perfectly timed opportunity for Bitcoin. Current market dynamics are driving a bolstered interest on digital currency for the long run that go beyond a rudimentary understanding of the rules of supply and demand. Historically, past halving events have always resulted in an eventual upswing of BTC. We’ve been rightfully bullish in the past, and we’re bullish now.”
Rich Rosenblum, co-head of trading at GSR:
“This latest run past $8,000 is as much about positive macro sentiment as it is about the upcoming halving. We’re starting to have a lot more certainty, as more countries begin to share their plans to reopen the economy in May. This clearer path forward helps explain why stocks and Bitcoin stabilized over the last seven days, along with today’s burst.”
Meltem Demirors, chief strategy officer of CoinShares:
“We are seeing some enthusiasm around bitcoin as it breaks $8k, but we are still watching closely and believe the sentiment is not yet bullish,” said Demirors. “I expect Bitcoin will see more trading activity around the halving — most likely ‘buy the rumor, sell the news’ and we’re seeing a lot of interest right now — our portfolio companies are reporting high volumes of inbound from firms looking to access Bitcoin markets, but the volume is largely in derivatives.”
(Updates prices, adds Sluymer and Qin quotes.)
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