Bitcoin traders and investors are nervously counting down to next week’s bitcoin supply squeeze, known as a halving.
The bitcoin halving will seen the number of tokens rewarded to those that maintain the bitcoin network, called miners, cut by half on May 12—with analysts divided over exactly how it will affect the bitcoin price.
However, technical data and sentiment signals are suggesting the bitcoin price could soon make a major move.
“The bitcoin halving is only five days away and in the lead up to this event, we’re seeing a lot of people speculating on what will happen, whether the price will go up or down, or if it will be a non-event,” said Danny Scott, chief executive of U.K.-based bitcoin and cryptocurrency exchange CoinCorner, comparing the bitcoin halving to the build up to New Year’s Eve celebrations and warning people not to “focus on short-term price movements.”
“There’s typically a big build up to the night itself, but the event is technically over as soon as midnight strikes—this is a similar situation for the halving.”
CoinCorner, along with many other bitcoin exchanges around the world, has recorded an increase in new users signing up over recent months.
“We’ve actually seen a 21% increase in sign ups during April (from the previous month) which adds to this year’s strong growth in the build up to the halving,” Scott added.
Elsewhere, the London-based bitcoin exchange Luno claims it will hit 4 million users in coming days—most of whom (75%) expect the bitcoin price to be “higher” or “much higher” by the end of 2020 according to a recent user survey.
Less than 5% of Luno users said they plan to sell their bitcoin over the next six months, with more than 90% expecting to buy more, increase trading or hold on to their crypto over the same period of time.
Luno’s chief executive, Marcus Swanepoel, is also upbeat—predicting that bitcoin will return to its all-time highs “in the next 12 to 18 months.”
“I believe we’re currently at the beginning of a long upward trend, one that, considering the broader economic environment, is set to experience increased volatility, especially in the next few weeks,” said Swanepoel.
“Nevertheless, with the halving just around the corner, and with some applied patience, we will see that same sharp increase common with previous halvings, even if it will take a bit longer that usual to get there.”
Meanwhile, bitcoin’s hash rate, a measure of the computing power being directed at the bitcoin network, has climbed to a fresh all-time high over the past week as miners try to squeeze as many bitcoin from the network as possible before the halving.
On May 3, the one-day average mining hash rate of the bitcoin blockchain reached 139 exahashes per second, according to data compiled by blockchain analysis firm Glassnode.
“The hash rate measures how much computer processing power is being put to work at any one time by the whole of the bitcoin network, and it always rises and falls in reaction to miners’ contributions to the network,” said Adam Vettese, market analyst at brokerage eToro, adding this is bitcoin miners’ “last hurrah” before the halving.
The wider bitcoin and cryptocurrency industry is also cheering the coming bitcoin halving, hoping it will bring with it new users and potential sales.
“While we don’t know how the upcoming halving will affect the price of bitcoin, we do know that investments are pouring into the institutional market and more individuals are investing in bitcoin than ever before,” said Pascal Gauthier, chief executive of Ledger, a producer of bitcoin and cryptocurrency hardware wallets.
“The crypto market continues to climb, in a trend very similar to what we saw pre-halving in 2016.”