Bitcoin has boomed back over 10k in the past few days crashing in the high 4ks due to the COVID-19 and a few other world factors at the time. With COVID-19 starting to slow markets are starting to bounce and Bitcoin is leading the way. While COVID-19 is playing a role in the market, another factor could be causing the market to spike.
Bitcoin is about to enter is 4-year halving cycle. At this point, you might be scared if you only read the title but fear not, it’s only clickbait. The truth is every 4 years the block reward for miners is cut in half. This means mining will yield half as much Bitcoin as it did before the halving. Currently, miners receive 12.5 Bitcoin every time a block is solved. In the next few weeks however when the reward is lowered miners will only receive 6.25 Bitcoin when a block is solved.
Why would the market move up?
Recently Litecoin had its halving event and the world thought the market would move up, however, it did not. Litecoin actually dropped in value for a few weeks before seeing a spike, and it was short-lived. Bitcoin could follow this but with such a large market share it may not. Currently, a bull run is in progress as we lead up but sell-off could happen after.
The big reason people feel the price should go up is the supply chain is slower thus creating a higher demand vs supply. This is correct but does not mean short term gains. In fact, this is a device used to help grow the market slowly not rapidly. While it will affect the overall value of Bitcoin in a longer scope the short term is a gamble. As always, never put in more than you can afford to lose.