Few weeks ago, the Bitcoin price jumped back up over 10,000 USD for the first time since September. What’s behind the spike? Several factors may be at work, but two things are most notable: the spread of Coronavirus, and the upcoming Bitcoin halving. But how are these two factors driving up the price?
Coronavirus and the Bitcoin Price
When it comes to Coronavirus, now renamed COVID-19, you can credit China’s position as a global economic powerhouse. As the country goes into lockdown in an attempt to curb the spread of the virus, it’s triggering fear of economic problems. After all, international companies with factories in China are already halting their operations. What does that have to do with Bitcoin? It’s traditionally a safe haven asset that functions independently of the global markets. In other words, when stocks go crazy, people often flock to Bitcoin as an alternative.
The Bitcoin Halving
Another factor that may be driving up the Bitcoin price is the upcoming Bitcoin halving, which is projected to take place in mid May of this year. Halvings were written into the currency’s code to occur every 210,000 mined blocks (or approximately every 4 years) in order to keep it as a deflationary asset. When a halving takes place, the reward for mining a block of Bitcoin is cut in half, from 12.5 Bitcoin per block mined to 6.25. Why is this possibly affecting the price? It’s a question of supply and demand. As the reward amount is halved, the supply is reduced, which drives up the price. But the halving may already be affecting the price, as people scramble to buy Bitcoin at lower prices before the big event.
To Buy or Not to Buy?
Is now the right time to buy Bitcoin? With these two factors at work, and especially with the uncertainty surrounding Coronavirus, it’s hard to know exactly what the Bitcoin price will look like in the coming months. However, there’s no doubt that Bitcoin is up 40% from the beginning of the year. If you make the decision to invest in Bitcoin before the halving, online brokers such as WaziX make it easy to buy Bitcoin through INR in both large and small amounts.