Bitcoin halving was completed successfully but its price is yet to show any ‘halving effect’ as Bitcoin continued trading sideways without much action. There is a clear area of support where bulls are continuously buying the dips.
Looking at the chart above, we can see all 4 attempts by the bears and how the bulls bought the dips every single time. This shows the bulls are willing to buy Bitcoin at around those prices, however, they also seem to be lacking strength as they have been incapable of pushing Bitcoin above $9,000.
The daily chart is turning bearish although the most likely scenario will be an equilibrium pattern formed with a lower high compared to $10,000 and a higher low from $8,100. The MACD has turned bearish but could turn bullish again if the bulls manage to break above $9,000.
Sideways Trading Is Not Good For Bitcoin
According to Hedge Fund Manager, Matt D’Souza, Bitcoin trading sideways will lead to a massive crash.
D’Souza explains how different hardware equipment to mine Bitcoin is currently affected by Bitcoin’s price. According to him, 30% of miners are making 0$ with their current equipment, and Bitcoin would need to go up fast in order to avoid capitulation.
When the market is stagnant, Bitcoin is always at risk of miner capitulation. Mining Bitcoin can become unprofitable at any time without a halving, this, in theory, will trigger sell-offs from miners which drop the price of Bitcoin.
However, is mining capitulation a real thing? Well, it’s not as extreme as it sounds. Bitcoin has a built-in mechanism that automatically adjusts the difficulty of mining in order to avoid just that. It is also important to note that due to the current pandemic, operational costs are lower almost everywhere and electricity is cheaper, especially in China which basically holds ⅔ of Bitcoin’s mining operations.
At the same time, Bitcoin miners only hold a tiny percentage of the overall trading volume which means that it’s unlikely they will be able to move the price enough to cause a huge drop.