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Could There Ever Be a Bitcoin Shortage? A Historical Pattern and BTC Trend Says What to Expect in the Coming Months

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Tomiwabold Olajide

First and largest crypto assets by market capitalization, Bitcoin (BTC) fell to lows of $3,800 in a black swan event on March 13th. In a broad-based market sell-off, Bitcoin (BTC) and the entire crypto market conceded to bearish action with millions of contracts liquidated.

It is notable to state that Bitcoin has since recovered, even setting yearly highs of $12,086 in September. However, one thing has changed since, after the black swan event, institutional demand for Bitcoin has surged and is still growing.

Bitcoin had its 3rd halving in May 2020. Historically, BTC was seen to rally 12 to 15 months after each halving as this event is known to impact directly on BTC price, especially in the long term following BTC supply reduction. Bitcoin supply is pegged at 21 million and with each halving, the amount of BTC Miners can produce reduces. Hence, fewer BTC is available in the market to purchase every 4 years.

Based on the trend of institutional demand for BTC, an asset manager, Dan Tapiero enunciates the possibility of Bitcoin shortage. Also from a historical pattern angle, a partner at Bitazu Capital, Mohit Sorout says Bitcoin may most likely hit fresh all-time highs in the next 3 months.

BTC/USD Daily Chart

Bitcoin is presently trading at $11,357.

Could There Ever Be a Bitcoin Shortage?

In the last few months, there has been a significant surge in institutional demand for Bitcoin (BTC) with several high-profile investments like Square, MicroStrategy, and Stone Ridge.

Bitcoin inflows to Grayscale Bitcoin Trust surged in Q3 of 2020 to hit $1.05 billion registering the largest ever quarterly inflows. Based on the rapid surge in institutional demand for Bitcoin, an asset manager Dan Tapiero believes this could lead to Bitcoin shortage implying that short sellers may be at the receiving end of the stick. This he said:

“SHORTAGES of Bitcoin possible. Barry’s Grayscale Trust is eating up BTC like there is no tomorrow. If 77% of all newly mined turns into 110%, it’s lights out. Non-miner supply will get held off-market in a squeeze. Shorts will be dead. Price can go to any number.”

The speculation about a potential Bitcoin shortage coincides with the post-halving cycle which is being met with unexpected institutional demand.

A Historical Pattern Says What to Expect in the Coming Months

The month of October has been quite an eventful one for Bitcoin (BTC). From BitMEX charges by CFTC to OKEx freeze, Bitcoin price resorted to trading within a constricted range. However, a partner at Bitazu Capital, Mohit Sorout says Bitcoin may most likely hit fresh all-time highs in the next 3 months or even earlier based on an observation of volatility.

He noted that based on previous price cycles, Bitcoin tends to move fast after a consolidation phase. This historical pattern applied to both breakouts and sell-offs.

For instance, from the start of May to late July, Bitcoin traded within a range between $8,800 to $9,800, while consolidating at $9,100. After two months of consolidation, it took BTC 12 days to record a 32% rally to hit highs of $12,123.

However, a trader Michael van de Poppe believes the most likely scenario in the near term would be a continued range-bound structure with some further tests at lower levels, probably a retest of $12k in the process.

He also noted these points: the overall weakness of Ethereum and the crypto market so far in Q4, the general notion that January is a perfect month for Ethereum and the markets, the fact that the market is still in the build-up of a new cycle. All this may also support Bitcoin’s leap in the next three months.

Image Credit: Shutterstock

The post Could There Ever Be a Bitcoin Shortage? A Historical Pattern and BTC Trend Says What to Expect in the Coming Months appeared first on Latest Crypto News.

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