After a sharp drop in price of around 60 percent within a very short period of time, Bitcoin was able to fight its way back slightly in the days of trading. Now some factors even speak for a sustainable bitcoin recovery.
- Bitcoin lost around 60% within four weeks
- FED ensures bitcoin recovery course
- Halving could trigger a rally
When the Bitcoin chart formed a “golden cross” the euphoria among crypto fans was huge. In mid-February, i.e. the 50-day line crossed the 200-day line from bottom to top, . All the more disappointing was the subsequent plunge in share prices, which occurred due to the Corona crisis.
Corona crisis led to Bitcoin crash
While a Bitcoin cost up to USD 10,495 at times on February 13, exactly one month later the daily low was only around USD 3,956. Accordingly, the leading cryptocurrency lost around 60 percent in value within four weeks. However, the coveted digital thalers were able to recover rapidly from this level. Bitcoin is currently trading above the 6,000 US dollar mark again and is thus – in view of the past 52 weeks – a good 50 percent up.
FED provides unintended support
It is ironic that the international central banks of all people, who have always been a thorn in the side of Bitcoin, have now been able to initiate the recovery of the crypto market. Because the fact that the FED now wants to carry out unlimited bond purchases not only benefits the stock and bond markets, but of course also gold and Bitcoin.
Due to the enormous liquidity glut announced by the US Federal Reserve, many investors are now afraid of high inflation and are fleeing from the Fiat currencies into tangible assets, gold and Bitcoin.
The biggest advertising campaign ever
According to Samson Mow, CSO of Bitcoin developer Blockstream, US President Donald Trump and Federal Reserve Chairman Jerome Powell are running the largest advertising campaign for Bitcoin ever with their current policies. And indeed, the current US monetary policy is causing the FED’s balance sheet total, at over 5,250 billion US dollars in total, to rise to a new record. This uncontrolled and exorbitant inflation of the money supply is likely to inevitably lead to extreme inflation of the US dollar, which over time will drive more and more people towards Bitcoin.
Bitcoin Halving in May 2020
In addition to the uncontrolled flood of money from the US Federal Reserve, the so-called Bitcoin halving should also ensure that prices continue to rise. Thus at the latest May, the reward, which crypto-miners receive for successfully dug blocks within the block chain, is to be halved. While the server operators currently receive exactly 12.5 Bitcoin for a dug block within the chain, from May onwards it will only be 6.25 Bitcoin. Due to the so-called halving, the supply of new Bitcoin units will automatically be scarce, which according to economic laws should lead to rising prices, provided demand remains stable.
In the past, the Bitcoin price always climbed to a new all-time high after a bitcoin halving. If Bitcoin were to target a new all-time high again this time, the digital currency has a potential of over 200 percent from the current point of view.
Counter-draft to the Fiat money
In the current crash situation, the deflationary properties of Bitcoin could prove to be a great advantage. After all, unlike fiat currencies such as the US dollar and euro, the coin is not infinitely reproducible. If this mechanism is recognized and accepted by more and more market participants in the coming weeks and months, the chances are good that the Bitcoin exchange rate will continue to rise in the future and bitcoin recovery would be huge.
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