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Bitcoin price rally due to Halving

2020.06.17

This could mean the following: The halving event is priced in. The market expect a run up pre-halving (March). The effect will come later in 2020 (after June).Historically, the assumption is confirmed by Arcane Research. The Bitcoin Halving is an extremely bullish event. As the following chart (Liquid Index) of BraveNewCoin shows, there was an accumulation phase before the Halving, in which the BTC price rose slightly. However, it was only after the Halving that BTC recorded a strong price increase.

Halving, the discussion in the community is seething as to whether the event is already reflected in the current price of Bitcoin. Based on the last two Halvings in 2012 and 2016, the Bitcoin spot price could undergo a massive rally before the block reward drops from 12.5 BTC to 6.25 BTC in May. Arcane Research is another analyst firm that does not support this thesis.

To assess whether the Bitcoin Halving has already been priced in, Arcane uses the implied volatility (IV), a measure often used to value option contracts. The value reflects the market’s view of the probability of price changes for a particular asset. It is also commonly used to predict future supply and demand.

According to the analysis, the IV, which currently stands at 60 percent, will rise to 70 percent by June, before the increase flattens out and is expected to settle at over 70 percent by September 2020. Arcane Research deduces that the market, which is strongly influenced by the option prices of Bitcoin, does not expect changes in the Bitcoin price until after the Halving in May. According to Arcane, this also coincides with the expiry of the half-year and quarterly futures contracts in June.

Author : Jake Simmons