By
Chimamanda U. Martha
April 19th, 2024
The price of Bitcoin (BTC) has been stagnating between $6,600 and $7,200 for a few weeks, but finally, a breakout occurred to the upside, which meant a 10% push towards $7,750 two weeks before halving.
While Bitcoin halving is approaching, there are more and more talks about the price of BTC. Though there are a lot of different points on what may happen next, now Bitcoin price is increasing. The asset is trading at $7,712 now, having added around 1.40% within the last 24 hours.
Galen Moore, senior research analyst for CoinDesk said in his podcast that, while waiting for the Bitcoin halving “we take a trip down memory lane back to the early days of Bitcoin” when miners started to race for network rewards.
He said:
“I think the introduction of Application Specific Integrated Circuits was a watershed moment in terms of changing the way bitcoin was mined and secured. If you know that a more powerful machine will get you more reward, make your business more profitable, you’ll be looking for the next more powerful machine all the time, knowing that your competitors are doing the same.”
On the other hand, one of the pioneers of Bitcoin mining Dave Carlson, claims that at the time “the Chinese engineering firms and Chinese producers of this technology far surpassed our ability and speed to get something to market.”
Looking at a ‘Surplus Energy’
We shouldn’t forget, however, that somewhere around 2015 and 2016 there was a turning point when mining operations in China started to abate and merge in different regions parts of the world such as North America. Carlson added that more efficient power production was the main motivation for this shift.
Expecting for the next Bitcoin halving event in May, some miners are looking at leveraging what Moore and Carlson call a “surplus energy” in order to make operations even more cost-effective. Surplus energy can be best explained as the run-off, or waste fuel, released by natural gas and hydropower plants that can be repurposed to mine Bitcoin with no cost. Carlson claims that this could show as a major technological breakthrough for mining if proven to work on a large scale.
For the reminder, when talking about the halving it is important to know that this is an event where the number of new Bitcoin created by miners every ten minutes or so is cut in half.
Bitcoin Halving as a ‘Perfect Storm’
One industry CEO recently referred to the upcoming halving as a “perfect storm” for Bitcoin, while blockchain data firm Coin Metrics released a report on why the event could lead to a short-term price decline that could build the foundation for future positive price movements. Blockchain data and intelligence platform Glassnode has discovered multiple on-chain data metrics that indicate investors’ optimism regarding the halving’s potential effect on the Bitcoin price.
A recent Glassnode Insights post says:
“In the weeks leading up to this milestone, a number of on–chain metrics are suggesting that investors agree with the bullish sentiment around the halving and are increasing their positions and hodling tight.”
Even though so-called on-chain data can sometimes be hard to evaluate when talking about the identities of users who are moving around their Bitcoin, Glassnode says there are a few general trends that are related to activity on the Bitcoin blockchain.
For one, the company claims that 42.83% of the circulating Bitcoin supply has not moved in the last two years. This represents a 10.4% increase from the same time last year, even though we have seen a very excruciating fall in the price that took place in the middle of last month. According to Glassnode, this data shows that the long-term holders were not flustered by the crypto asset market’s fall during the month of March.
New Range Defined for Bitcoin
Currently, a new range is defined for Bitcoin price before the halving. The resistance is found at the $7,700-7,800 area, while the support is found between $7,275 and $7,350. As long as the price remains above this support level, further upwards pressure and momentum are warranted, especially going towards the halving.
Head of research at TradeBlock James Todaro says he predicts the mining profitability of Bitcoin to go up from $7,000 to anywhere between $12,000 and $15,000 after the coin halves.
“Following the Bitcoin halving, miners’ estimated breakeven costs will rise from ~$7,000 today to ~$12,000–15,000 per BTC after. I would not be surprised if we see Bitcoin prices rise above these levels so that miners remain profitable,” explained he.