To understand the current market bitcoin trends, it is imperative to first understand what bitcoin is and its trading methods. For those who are new to this platform and trading option, let me simplify this for you as much as possible.
To start with, let us understand bitcoins. Bitcoin is an open-source peer to peer money, which uses peer-to-peer technology to operate with no central authority or banks. The transaction and issuing of bitcoins is carried out collectively by the network. Being an open-source with no central public authority, its design is public and no single unit owns or controls it. Every stakeholder is equally involved and can take equal part in it. Through many of its unique properties of being divisible, scarce, portable, verifiable etc, bitcoins allows for certain payment systems which were not previously available.
One of the best features is the option of buying only a fraction of bitcoins. That's right, you can even buy bitcoins worth $10. That is because bitcoin is divided up to 8 decimals.
Next and perhaps the most important concept is the bull market. A bitcoin bull market is the period when bitcoin prices rise or is expected to rise, making it an ideal period to trading or investment. For one bull market phase, approximately five price rallies usually occur.
These bull markets show certain price rallies which have been observed over the last two times. However, the last price rally was a historic one. That is because, during the last price rally, bitcoins reached a new all-time high which surprised many people around the world.
Currently, bitcoin is in a bull market phase. Simply put, thousands of people come together to solve math puzzles with their computers. After solving the maths puzzles they exchange the answers of these maths puzzles with each other. During the process, they create a new block which confirms the bitcoin transactions to the bitcoin network and creates new bitcoins. This is called bitcoin mining. New bitcoins which are created are rewarded to the people who solve the math puzzles. This is called mining reward. When bitcoin started the mining reward of each block was 50 bitcoins. In November 2012, the mining reward was reduced to 25 bitcoins for each block. In July 2016, the mining reward was reduced to 12.5 bitcoins for each block. Around May 2020, the mining reward will be reduced to 6.25 bitcoins for each block. This process of reducing the mining rewards is called 'halving of bitcoin'. During 2012 and 2016, bitcoin halving occurred while bitcoin was recovering from a bear market. A bear market is the opposite of a bull market. The first price rally happens a few months before the halving after which bitcoin price generally moves sideways for a few months. Then the halving event occurs. After the halving bitcoins price rallies a few times and reaches a new all-time high.
Let us look at the price rallies of this bull market. During the first price rally in 2019, bitcoin prices reached up to about $13000. Then it dropped to about $6700.
Bitcoin is currently trading at about $10000. This is probably the beginning of the second price rally of this bull market. At least I feel so, however, only time will tell.
Since we have seen only one price rally of the current bull market, I think bitcoin is still cheap. It's better to buy bitcoin when it's cheap, so one can profit from an increase in price.
Would you buy bitcoin at about $10000?
Disclaimer: This is not financial advice. This is not tax advice. This is not legal advice.
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