Is There Another Bitcoin Bubble Developing?

Bitcoin took the world by a storm in late 2017, reaching an all-time high value of about $20,000 in December that year. The cryptocurrency surged remarkably through that year. At the beginning of it, Bitcoin (BTC) was trading at a modest $800 range, which means that it managed to gain around 2,400% throughout the year.

Of course, its current price is nowhere near that ATH value. Bitcoin (BTC) currently trades at around $5,400 (as of writing these lines), which is around 72% lower. This caused many to comment that the cryptocurrency went through a so-called bubble which has popped throughout 2018.

Indeed, looking at the price movement, it does display the characteristics of a bubble. Its value went up sharply high and then it went down just as quickly.

However, since the beginning of 2019, Bitcoin’s price has been steadily recovering, causing many to believe that the end of the prolonged bear market is already here. But the question is whether there is another Bitcoin bubble in the making.

Bitcoin’s Price in 2019

2019 has been a lot better for Bitcoin than 2018. Since the beginning of the year, the cryptocurrency has managed to gain about 40% in terms of its value. Most notably, the last rally was at the beginning of April when Bitcoin spiked from around $4,150 to $5,200 in a little less than a few hours.

More impressively, however, the cryptocurrency has retained the gains and hasn’t decreased in value so far. This causes many to believe that the price is consolidating in its newly found range and that this might provide grounds for another leg up.

On another note, some analysts are still holding that this hasn’t caused the cryptocurrency to bottom. If that’s the case, we might be in for a steady decline before the final capitulation. Should this turn out to be the case, traders might be able to short Bitcoin on margin in order to capitalize on the decline.

Bitcoin’s Halving in May 2020: Factor to Consider

Another particularly important upcoming event for Bitcoin in the next year is the halving. It is expected to take place somewhere in May 2020 and it will reduce the block rewards miners get in half. In other words, Bitcoin’s total supply on the market will be reduced by half.

Simple economic principles dictate that if the supply of an asset is reduced while the demand for it increases or remains the same, its price should increase.

A certain popular cryptocurrency trader and analyst on Twitter has outlined that there is a trend developing in association with previous Bitcoin halvings. According to him, Bitcoin has “traditionally started pumping around 1 year on average before its halving date.”

So far, his findings are shaping up to be correct. We are a little over a year away from the halving and, indeed, Bitcoin’s price has started pumping, as outlined before.

It’s anyone’s guess to determine whether or not there is another Bitcoin bubble in the making. What’s certain, however, is that everytime Bitcoin has rallied following a bottom, its price has reached a new all-time high. This has caused many to believe that the next massive rally will see the price surge past its former ATH of $20,000.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.