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It has been discovered that there is a correlation between Bitcoin price and mentions of the upcoming BTC halving in media outlets. The more mentions are there, the higher the price is.
It seems that whenever some media informs the public about the upcoming Bitcoin halving, the strongest cryptocurrency tends to grow. The BTC halving event is getting closer and closer. That’s why there is no surprise that the number of mentions is growing. According to a popular countdown, there are only 76 days left.
Digital asset alternative data provider The TIE recently found out that there might be a parallel between Bitcoin price in the market and media outlets writing of the upcoming BTC halving.
The TIE CEO Joshua Frank said:
“We noticed how, as mentions of the halving were decreasing last fall, that tended to correlate with downward price movement. Once that narrative picked up again, Bitcoin saw upward price movement.”
On February 22, The TIE showed a chart showing the correlation.
The number of mentions of the halving in crypto publications appears to have led price movement of BTC.
Mentions of the halving have hit an ATH.
Data via The TIE's Crypto SigDev™ pic.twitter.com/ywfzwVf66K
— The Tie (@TheTieIO) February 22, 2020
Bitcoin should go through its halving event in May 2020. That means that the coin’s mining reward will fall from 12.5 BTC to 6.25. That actually means that decreased number of BTC will enter the market on a regular basis.
This event happens every four years. Bitcoin already went through two other halving events since its 2009 outset.
Traditionally, BTC Halving Meant the Bitcoin Price Rise
Then we look through history, both of these events led to higher prices for crypto’s lead asset. That is also one of the reasons many investors have pretty much bullish beliefs for the event this year.
After looking at data from different crypto media outlets, the TIE found a “moderately strong and positive” relation between mentions of Bitcoin’s halving and the asset’s price, Frank said.
“What is interesting here is not that the two variables are perfectly correlated, but that price has generally trailed the halving narrative. As digital asset publications have discussed it more, price has followed. That isn’t to say that correlation equals causation though.”
Frank also mentions one important thing – a perception of Bitcoin as digital gold. He thinks that exactly that was the main boost for the price last year. That seems to become a narrative in which Bitcoin’s upcoming halving boosts the asset’s price higher.
And it is true that throughout the crypto history, many investors and analysts have compared the asset to gold in various ways.
Frank warns though, that “this data is relative over that period,” and that “it isn’t a measure of raw mentions.”
CZ Zhao Predicts Bitcoin Will Rise after Halving
Just last week, Binance CEO Changpeng Zhao said that Bitcoin will rise further in price due to the BTC halving. But let’s face it – Bitcoin, together with the rising altcoin market, has had an amazing start of the year.
The bitcoin price has rallied around 50% since January 1. Some smaller cryptocurrencies made even triple-digit percentage gains.
“I personally believe the halving has not been priced in. Usually I don’t give market predictions because I will be wrong 50% of the time.”
Usually, in already developed markets, equity, commodities and currencies are priced based on future expectations.
That may make us think that as Bitcoin traders and investors are aware of the May halving (especially it being constantly mentioned in the media), the price will have already made the gains related to it.
CZ disagrees by saying:
“The market is not efficient. Most people don’t get information quickly. People need a lot of time to let concepts sink in and adjust.”
“Historic events do not predict future events, so don’t take that too literally. Bitcoin halving will mean it costs miners almost double what it does now to produce one bitcoin. Psychologically, those miners won’t be willing to sell below that price,” warns he.