Bitcoin prices have floundered lately, failing to recover much of their losses after falling sharply on Saturday.
The digital currency fluctuated between $8,000 and $9,000 today, after losing more than 16% of its value yesterday, CoinDesk figures show.
The cryptocurrency rose to more than $9,800 on Saturday, before plunging below $8,200, additional CoinDesk data reveals.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
When explaining this recent price action, several analysts pointed to anxiety surrounding the upcoming halving, which is currently scheduled to take place tomorrow at roughly 7 p.m. ET.
“I think people are nervous before the halving,” said Marouane Garcon, managing director of crypto-to-crypto derivatives platform Amulet.
Bitcoin Might Benefit From A US-China Cold War
FATF’s “Travel Rule” – Beware of False Prophets
BlockFi Plans Asian Expansion Amid COVID-19 Economic Concerns
“There’s a lot of hesitation and uncertainty surrounding the event and it shows,” he stated.
“People are waiting for a price jump after the event before they fully commit,” said Garcon, emphasizing that this is what is needed for bitcoin to “reach its previous levels.”
Denis Vinokourov, head of research for London-based digital asset firm Bequant, also spoke to this reluctance.
He noted that while “bulls” recently “managed to push Bitcoin above $10k level,” there was a “distinct lack of follow through action, which suggests hesitation and market nervousness ahead of key risk event.”
The upcoming halving is creating uncertainty, something considered anathema to many investors.
John Iadeluca, founder & CEO of multi-strategy fund Banz Capital, weighed in on this situation.
“On one hand, the Bitcoin halving offers an immensely bullish point of view in that miners will shift to a more pseudonymous network backend maintenance position with exchanges and institutions assuming a role in facilitating economic participation,” he noted.
“An environment of the like is frightening, and combined with the fact that miners receive less after the halving on May 11th, there could arise the possibility of drastic decrease in mining activity,” said Iadeluca.
“Alongside the halving is an influx of new interested investors and users who will flock to retail exchanges to start with Bitcoin, and with Coinbase, arguably the most popular retail crypto exchange, suffering outage once again with days left to the halving, new as well as institutional investors would feel fear,” he concluded.
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether and EOS.