- Historical data suggests bitcoin could put in a positive performance in the second quarter.
- Bitcoin is currently trapped in a pennant pattern on the daily chart. A breakout will likely yield a rally toward $8,000.
- A pennant breakdown would put the bears in a commanding position and open the doors to $5,000.
Bitcoin kicked off the historically strong second quarter on a positive note, scoring gains overnight despite further losses on Wall Street.
The top cryptocurrency by market value rose 3.5 percent from $6,420 to $6,650, having closed Q1 2020 with a 10 percent loss, according to CoinDesk’s Bitcoin Price Index.
The cryptocurrency remained bid even as the U.S. equities began Q2 on a weak note with the S&P 500 falling 4 percent. Investors shunned risk as President Trump’s stark warning on the coronavirus pandemic raised the specter of a prolonged shutdown and deeper economic recession.
Bitcoin printing gains amid the risk-off action in traditional markets is a welcome change for observers who believe the cryptocurrency is a haven asset like gold. The cryptocurrency largely tracked the S&P 500 in March as fears of a coronavirus-led recession triggered a global dash for cash.
Historical data shows bitcoin has put in a positive performance in six out of the last eight years, as seen below.
Sellers had an upper hand in the second quarter of 2013 and 2018, but the losses were restricted to single digits. The 161 percent rally seen in the second quarter of 2019 is the third biggest quarterly gain on record.
Many analysts are of the opinion that the massive money-printing efforts recently announced by global governments and central banks amid the Covid-19 crisis could boost bitcoin’s appeal as an inflation hedge.
And, while it’s far from certain, the mining reward halving– the programmed-in 50-percent reduction in rewards for bitcoin miners due in May – may put upward pressure on prices. “A bitcoin emission cut of 50% is a fundamentally bullish…