The probability of bitcoin rallying sharply after the May 2020 mining reward halving is quite low, according to the options market.
As of Jan, 21, the options market was pricing only 32 percent odds of bitcoin ending June above $10,000. Meanwhile, the probability of prices finding acceptance above $20,000 was only 4 percent.
Halving priced in?
Reward halving takes place every four years and reduces rewards per block mined by 50 percent.
Currently, miners receive 12.5 BTC per block. That number will drop to 6.25 BTC per block after May. Essentially, significantly fewer bitcoins will hit the market after May, possibly creating a supply deficit.
That possibility, however, has been priced in by the markets, Jihan Wu, co-founder and ex-CEO of Bitmain, told CoinDesk in October.
“People speculate too much before the halving, and then you can’t sell the good news anymore. Maybe, this time a bullish cycle is not coming yet,”said Wu.
Markets have been discussing halving – a historically price-bullish event – for over a year now. So, it's quite possible that the event was priced in the second quarter of 2019 when the cryptocurrency rose from $4,000 to $13,880.
As a result, the event could turn out to be a non-event. Options market does think so, as noted earlier.
That said, the probability of bitcoin making a convincing move above $10,000 by the end of June would improve if the recent uptrend continues.
At press time, bitcoin is trading at $8,400, representing a 17 percent gain on a 24-hour basis. |
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Range Breakdown
BTC: Price: $8,390 | Market cap: $153 billion | 24-Hr Volume: $24 billion
Trend: Bullish Bitcoin has dived out its recent trading range of $8,750-$8,460, signaling a continuation of the pullback from Sunday's high near $9,200 and opening the doors to deeper support levels at $8,200 and $8,000.
Bitcoin charted multiple 4-hour candles with highs around $8,200 in the Jan. 11-13 period. As a result, $8,200 is a key support to watch out for. On similar lines, the psychological level of $8,000 is also crucial support.
The short-term technical indicators have turned bearish, supporting the case for a drop to $8,200. For instance, the 5- and 10-day averages have produced a bearish crossover and the daily chart MACD histogram has crossed below zero, signaling a bearish reversal.
On the higher side, $8,750 is the level to beat for the bulls. A sustained move that level would revive the short-term bullish view and allow a re-test of recent highs near $9,200.,000 is also crucial support.
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| | | | Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments. |
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