Bitcoin
After Bitcoin halving, what could happen in terms of price?
The long-awaited Bitcoin halving has taken place.
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In every major asset rally, there is a classic hockey stick shape created on that asset’s chart. It’s simply an exponential progression. Price growth piles on top of price growth at an accelerating rate and the chart is like the exhaust cloud from a rocket launch.
This is typically caused by FOMO, where buyers pile in, or perhaps lemmings jump off the cliff at an increasingly rapid pace. Obviously, at some point there will be no more buyers to imitate or lemmings at the top of the cliff to follow the leader to the rocks below. That’s when a bubble bursts.
Now, asset holders don’t like the word bubble because it suggests an ongoing crisis. Unfortunately, few bubbles escape this endpoint, and although Captain Hindsight types laugh, an asset’s bubble/crash phase is rarely anything other than the beginning of a long growth story. The biggest companies in the world are children of the dotcom boom, for example, and according to statistics even tulips are still a $250 million industry in the Netherlands, shipping 3 billion post-bubble bulbs.
So now bitcoin, and therefore crypto in general, is trading sideways in a high range between $60,000 and $70,000.
This is what holders want to see next:
The Bitcoin Chart Holders Want to See
Credit: ADVFN
And this is the determining equilibrium range:
The Bitcoin Chart Balance Range
Credit: ADVFN
So if you don’t have a strong opinion on the direction (and even if you do), the box that encloses this balance range is something to look at. This technique is an ancient method of technical analysis born in the 1950s, in a post-war technology bubble, when stock charts were the domain of people who controlled prices manually. It remains a great device for volatile upward price repricing/bubble situations. The box represents an equilibrium range reached after a repricing event, where the asset oscillates with incoming noise awaiting the next big move up or down. When it is repriced, it loses the noise and goes in one direction until it reaches a new equilibrium, and this is where bitcoin is now.
The final crypto recovery tends to occur after the halving and occurs because simply half of the new supply hits the market. The price jump has nothing to do with anything other than the fact that there are fewer new bitcoins coming into supply, so this pressure builds and builds until the market readjusts prices to the new reality. This suggests there is at least another upward surge to come.
If we don’t get another edge, I think it will signal the end of the crypto monster and the beginning of a new domesticated and regulated blockchain reality, with little chance of the fortunes of the past emerging overnight.
However, I think bitcoin has gone from $90,000 to $100,000 and even beyond, but that doesn’t mean destiny. So we sit and watch and wait for the next reassessment.
In fact, I see the following analysis as quite likely:
My analysis of what the future holds for the price of bitcoin
Credit: ADVFN
With the $100,000 level achievable on fundamentals, sentiment and round number logic. Many think the top is much higher, but I will certainly let them carry my bags for that final situation.
There is the next step, final or not, it is the only decision at this stage and overall I think there is. I still think that halving is fundamental and is a chronic factor and not an acute one. Either way, we have to watch the box range to judge whether bitcoin will rise like a rocket or fall like a stone.