Bitcoin in recent weeks has roared back from its sell-off . The cryptocurrency could be set to break out further, according to researchers at Fundstrat Global Advisors.
It was recently trading at $8,851.40, up 1.27% in the past 24 hours, according to CoinBase. Bitcoin had flown as high as $9,411.56 Thursday afternoon, before paring back gains.
“Bitcoin has certainly sprung back to life,” writes Craig Erlam, senior market analyst at OANDA. “It took some patience with the break of $7,500 not giving it the boost it could have but once $8,000 fell, it really took off.”
A number of Bitcoin analysts pointed to the upcoming halving , an event every four years when rewards for those mining new coins using their computer power are halved. The halving, also referred to as a “halvening” is expected on May 12.
“Historically, reward halvings have resulted in significant price appreciation since they reduce Bitcoin’s supply, which pushes the price higher,” noted Joe DiPasquale, CEO of BitBull Capital. “The market sentiment is also positive leading up to the event. That, combined with expected inflation in the long-term for the U.S. dollar due to recent quantitative easing, is being credited with today’s surge.”
Fundstrat researchers wrote in a note to clients on Thursday that Bitcoin had crossed its $8,897 200-day moving average. Over a 10-year sample size, Bitcoin’s typical six-month forward returns are 193% after such an event, according to the note.
Bitcoin did cross this mark last year. But the team at Fundstrat argued the potential rally was hampered by negative chatter regarding Facebook’s (ticker: FB) Libra project. Lawmakers had been critical of Facebook’s plans for its own cryptocurrency project .
“If crypto doesn’t face regulatory/Congressional backlash, there are better odds for a positive outcome,” according to the researchers at Fundstrat.
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