Bitcoin topped at $9,300 for the first time in a week on “halving FOMO.”
The cryptocurrency’s upside move surfaced as the S&P 500 index pointed towards new gains at the Wednesday’s open on Wall Street.
The gains across the board came despite concerns about the long-term impact of coronavirus on the global economy.
Bitcoin prices rose on Wednesday, crossing above the $9,000-threshold as traders anticipated bullish outcomes from the upcoming halving event.
The benchmark cryptocurrency topped at $9,300 after logging a 3 percent intraday rally. The move uphill stretched bitcoin’s rebound from March lows to 100 percent. Meanwhile, it further helped the unique asset maintain its year-to-date returns in positive territory, now above 26 percent.
BTCUSD eyes a pullback after hitting $9.3K | Source: TradingView.com, Coinbase
Bitcoin Miners HODLING
The gains closely followed a surprising ascent in Bitcoin’s on-chain data. The cryptocurrency’s hashrate, a metric that reflects the computation power of the Bitcoin network, surged to its all-time high on Tuesday. The jump pointed at a growing miner’s contribution, with analysts reminding that it was their last chance to accumulate a 12.5 BTC reward ahead of halving.
Bitcoin’s mining reward will go down by half to 6.25 BTC per block effectively from May 12, 2020. Analysts earlier anticipated that the halving would push small miners out of business. But bitcoin’s latest upside push brought its prices way above the perceived breakeven, saving miners from going down.
“I have thought about a miner capitulation occurring at the halving,” said Jason Williams, co-founder & partner at Morgan Creek Digita. “But I am slowly changing my opinion on that point as I am not sure it will have that big an effect on the price. Large miners have already gotten the mines sorted and have the new equipment hashing.”
It is now possible that miners have started holding their bitcoin rewards, creating a supply deficit in spot markets.
Gains in the bitcoin market also surfaced after the S&P 500 index closed Tuesday 1 percent higher. Futures linked to the U.S. benchmark also pointed towards new upsides after the New York opening bell on Wednesday, with investors concentrating squarely on the reopening of the U.S. states following weeks of lockdown.
The correlation between Bitcoin and the S&P 500 grew to record highs against the fast-spreading coronavirus pandemic. They fell and rebounded hand-in-hand from February 2020, showing traders utilized their volatility to extract short-term profits. Bitcoin, with its higher risk-reward, offered more gains than its traditional counterpart.
Bitcoin and S&P 500’s correlation grew amidst the fast-spreading Coronavirus pandemic | Source: TradingView.com
There are, however, pending concerns. Investors fear that reopening economies when the Coronavirus cases are surging could start a new wave of infections. Meanwhile, Donald Trump has raised the fears of a new trade war after accusing Beijing of leaking coronavirus from a lab in Wuhan.
All of that could add bearish pressure on the S&P 500. Losses in the U.S. benchmark could, in turn, lead investors to liquidate their profitable bitcoin positions.
Photo by Giorgio Trovato on Unsplash