The Bitcoin halving in April disappointed the bulls. While BTC was still trading at 64,000 US dollars (USD) on the day of the subsidy halving, the digital gold is now only at 61,500. In other words: things have been going downhill since the halving.
Why is that and why does the halving have no effect?
During the halving, BTC inflation halved from 900 BTC per day to 450 BTC per day. This means that, for example, within ten days, only 4,500 Bitcoins entered the system instead of 9,000 Bitcoins.
After a hundred days, the difference between target and actual is already 90,000 versus 45,000. In other words: With some delay, the halving becomes more and more relevant.
This also explains why BTC always tends sideways after the halvings. The effect is simply not noticeable in the real economy at first.
“The effect only becomes statistically significant after 100 days,” Dr. André Dragosch, Head of Research at the ETC Group, told BTC-ECHO.
That would be sometime in the summer.
Bitcoin: Macro risks outweigh short-term risks
In the short term, however, the risks still outweigh the benefits. The US Federal Reserve is insisting on high interest rates while at the same time increasing the risk of recession. This is bad for Bitcoin, as we describe in detail in our current Bitcoin Report.
Market sentiment has cooled accordingly. The Relative Strength Index (RSI) is slowly returning to neutral territory at 64 out of 100 points. The RSI is a so-called momentum index. At low values, Bitcoin is considered oversold and a trend reversal becomes more likely.
But the current market environment could also bring opportunities. In the medium term, the macroeconomic situation indicates the biggest Bitcoin bull run of all time. Or, to put it in the words of hedge fund manager Raoul Pal: Welcome to the Banana Zone.
In the current Bitcoin Report, we take a close look at the macroeconomic situation. Here you can also read why this bull market is far from over and when an upswing can be expected due to the halving.
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