Alternative data provider The TIE has found a clear correlation between Bitcoin market prices and mentions of the upcoming halving event. The company came to this conclusion by evaluating data on Bitcoin prices from various media outlets.
Clearly defined relationship
Joshua Frank, CEO of The TIE, explained this in detail. He said his team noticed a drop in the price of Bitcoin as the number of mentions of the upcoming halving event began to decrease. He explained that as the narrative of the halving event gained traction again, the price of Bitcoin began to rise again.
On February 22, 2020, The TIE published a tweet about this matter. The attached picture shows the changes in Bitcoin price and the number of mentions of the halving event.
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Bitcoin sentiment on Twitter often leads the narrative of Bitcoin as digital gold in publications.
The more people are optimistic about Bitcoin -> the more the narrative of Bitcoin as digital gold grows.
pic.twitter.com/Pma5nyYEHP
— The Tie (@TheTieIO)
February 25, 2020
The firm concluded that the number of mentions of the upcoming halving event in cryptocurrency publications directly affects the overall price movement of Bitcoin. However, media coverage of the halving event has now reached an all-time high, and Bitcoin prices are struggling to follow this trend.
Supply reduction is coming
The Bitcoin halving event, which happens almost every four years, is expected to take place around May 2020. This will halve the cryptocurrency’s mining reward from 12.5 to 6.25, hence the name. This means that the supply of Bitcoin on the market will decrease, eventually leading to a halt in production.
Bitcoin has already gone through two halving events, which have occurred every four years of Bitcoin’s existence. Historically, this development has led to a great deal of hype, which has driven up the price of the cryptocurrency industry in general and Bitcoin in particular. Based on this prior knowledge, many Bitcoin investors are optimistic about this event.
Emotions are crucial
A review of data from 22 major cryptocurrency media outlets by The TIE concluded that there is a “moderately strong and positive” correlation between Bitcoin’s price and the number of mentions of the upcoming halving event.
Hopefully, there won’t be another bubble burst like the past two, but many analysts pessimistically predict that it could happen again this year. Only time will tell, but the odds suggest that another market crash could happen.
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