Bitcoin’s recent price fluctuation has created a lot of anxiety among crypto investors and traders. Having started at around $7,000 at the start of the year, the top coin has swung wildly above and below $10,000. With Bitcoin’s halving around the corner, many in the crypto space expect Bitcoin to keep climbing up the ladder. At the time of writing, Bitcoin was trading at $9,889.07
In December 2016, Bitcoin had experienced a price rally rocketing from under $1,000 reaching a whopping $20,000 by December 2017. Although the current price rally isn’t exactly similar to the previous one, the coin hasn’t seen such a rally in almost two years.
Brian Kelly, CEO of BKCM and Bitcoin’s early adopter, recently in an interview, talked about Bitcoin’s latest price rally. He stated three reasons as to why Bitcoin rallied by more than 44 percent this year.
The first reason he cited was the upcoming Bitcoin halving; Bitcoin halving usually brings about a price surge and this is the result of the supply/demand ratio.
The fluctuation in a coin’s price is directly proportional to its demand in the market. Talking about Bitcoin, the supply of BTC drops while the net aggregate demand for BTC remains the same, after the halving. This is termed as “negative supply shock” which basically causes Bitcoin’s price to soar higher after halving. This, in turn, results in the community accumulating BTC before the halving, which explains the rise in price.
He further added that miners would be affected by the halving as the reward for mining was going to be cut in half from 12.5 BTC to just 6.25 BTC, by the end of April. Additionally, he also noted that if the coin’s price stayed somewhere around $10,000, miners would only make $62,500 per block.
He stated,
“Miners have stopped selling their inventory because they want higher prices. They are expecting higher prices.”
Secondly, he noted that the increased adoption rate of Bitcoin also led to the price surge. This is self-explanatory as Bitcoin is now seen as a ‘safe-haven’ asset across the globe and more people are taking to Bitcoin, which in turn resulted in bullish momentum.
Explaining further, he stated,
“When you see addresses growing, that means that fundamentals are improving.”
He cited Altcoin rally as the third and final reason for Bitcoin’s price surge. Interestingly, by the looks of it, altcoins seem to be outpacing Bitcoin. For instance, the Ethereum market is up by around 70 percent; Binance Coin is up by 35 percent and even XRP is out in front of Bitcoin. However, the larger picture indicates that Bitcoin, on every front, is set to lead the market for a very long time.
