Bitcoin price is experiencing a rebound following the release of the US Consumer Price Index (CPI) data, which showed a slight improvement in inflation. Analysts are also examining the impact of the general market trend and the upcoming Bitcoin halving on miners.
The selling pressure for Bitcoin is expected to ease after the release of April’s CPI data, which revealed a 0.3% increase, slightly lower than expected. The CPI measures the average change in customer pricing for goods and services over time and serves as an early indicator of inflationary pressures.
In response to the CPI data, Bitcoin saw a sudden 7% spike in its price, reaching $65,152. The S&P 500 index also hit new all-time highs, surpassing the 5,300 mark. These positive reactions indicate the confidence of both traditional finance and the crypto market.
Analysts are now focusing on how mining will react to the upcoming halving event in 2024, which reduces miners’ incentives by 50%. Based on historical patterns, it is projected that Bitcoin miner revenue will recover within 2-5 months after the halving. This consolidation phase is then followed by a significant increase in Bitcoin’s price.
Bitcoin analyst Willy Woo suggests that inefficient miners are removed from the ecosystem during the halving, leading them to sell their BTC before exiting completely. However, the strong miners, who operate with higher profit margins, are expected to survive and not need to sell, thereby reducing miner sell pressure.
While it may take 2-5 months for the new supply and demand dynamics to reflect in Bitcoin’s price, experts like Tom Lee of Fundstrat believe that Bitcoin miners have the leverage to drive up the cryptocurrency’s price.
Currently, BTC is trading at $66,252, marking a 6.7% increase in the past 24 hours. Trading volume has also risen by 77.8% to $42.8 billion, indicating renewed interest from investors.
In terms of advancements in Bitcoin mining, Block Inc., led by Jack Dorsey, has developed a 3nm mining chip that enhances the efficiency of its Bitcoin mining process. This development aligns with Block’s goal of decentralization and improved mining efficiency.
However, Bitcoin mining in the US faces challenges as President Joe Biden has proposed a 30% excise tax on electricity used by miners. This proposal has been met with criticism from the crypto community, as it may hinder Bitcoin mining activities in the country.