Trade Of The Week: Bitcoin Halving vs. Geopolitical Fears

• Big week for “OG” crypto

• Halving event looms large

• Watch out for geopolitical tensions

• Prices under pressure on D1 chart

• Key levels at $61500, $65000 and $68000

In case you missed the memo, Bitcoin’s halving is almost here!

This is a significant event that reduces the mining rewards for the “OG” crypto by half.

But before we cover what, when, why and how to prepare for this event…

Watch out for geopolitical tensions.

Bitcoin along with other cryptocurrencies may be influenced by escalating geopolitical tensions in the Middle East.

On Saturday, Bitcoin prices tumbled over 8% as risk aversion soured appetite for riskier assets. The “OG” crypto along with other altcoins may be in store for more pain despite the upcoming halving if tensions escalate further between Israel and Iran.

With the above said, here is a quick lowdown:

In our 2024 market outlook, bitcoin was one of the assets we picked that could see monster moves.

The approval of Bitcoin ETFs back in January has boosted its mainstream acceptance with fresh inflows propelling the cryptocurrency to all-time highs. In fact, at one point in Q1 prices were up over 70%.

Note: Bitcoin is currently trading 10% away from its all-time high.

    1) What is the Bitcoin halving?

This event reduces the rewards for mining new blocks in the Bitcoin blockchain by half.

It happens approximately every four years with the first halving taking place in 2012.

Fast forward, we a less than a few days away from the fourth halving which will reduce the block reward from 6.25 BTC to 3.125 BTC.

Note: At launch in 2009, the reward was 50 BTC per block.

    2) When is it expected?

While the exact date of the halving is unknown, it is expected to happen when the total number of bitcoin blocks hit 740,000. Market expectations range between April 19th and April 20th.

    3) Why does it happen?

To put things into context, imagine if you are in the business of mining a precious resource, and suddenly, the rewards received from extracting the resources are halved. Will it still be worth all the effort?

It is the same concept with Bitcoin mining which is designed to slow down supply and increase scarcity - potentially leading to higher prices if demand remains strong.

    4) How can you take advantage of this?

Historically, post-halving periods have seen significant price increases with the one back in May 2020 no exception. Prices appreciated a whopping 230% over a 7-month period, reaching an all-time high just below $29,000 by year end.

Should history repeat itself once again, this could propel Bitcoin to fresh all-time highs over the next few months.

It does not end here…

Given the hype this major event may create and increased attention towards the crypto space, it could indirectly impact altcoins.

So, watch out for Ethereum, Dogecoin, Solana and Avalanche which have shown a positive correlation above 90% to Bitcoin’s move at any given 5-day rolling period over the past 5 years!

On the flip side…

The market reaction to the upcoming Bitcoin halving could be different.

Bitcoin has come a long way since the first halving back in 2012 with much more media coverage and awareness compared to the past. Essentially, the expected bullish reaction to the upcoming halving may already be priced in.

Meaning, traders may end up adopting a ‘buy the rumour, sell the fact’ response to the event with the expected rally delayed or even disappointing expectations.

    5) Technical forces

Prices seem to be under pressure following the sharp selloff witnessed on Saturday. Although the broken symmetrical triangle may support bears, prices are trading within a wide range on the daily charts. Support can be found around $61500 and resistance at $73850.

• A solid breakout and daily close back above $65000 may open a path towards $68000 and $71000 before bulls challenge $73850.

• Should $65000 prove to be reliable resistance, this could trigger a selloff towards $61500 and $60000.

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