A major event in the cryptocurrency world occurred just before the weekend, and it drew many investors into digital coins, tokens, and related assets on Monday. By and large, the numerous crypto stocks on the exchange did very well, with more than a few notching double-digit price gains on the day.
This event was (it nearly goes without saying for anyone even mildly interested in cryptocurrencies) the halving of its most important asset. The positive knock-on effects lifted the value of crypto miners Riot Platforms(NASDAQ: RIOT) and Cleanspark(NASDAQ: CLSK), which advanced a respective 23% and 11%. Also rising notably was all-in Bitcoin(CRYPTO: BTC) investor MicroStrategy(NASDAQ: MSTR); it closed the day nearly 13% higher.
The halving was hot
For those who might not know or be fully aware, the halving refers to the reward miners receive when they create new Bitcoin. Since the supply of the leading cryptocurrency will ultimately be capped, roughly every four years those rewards are cut in half (hence the term "halving"). Bitcoin's latest halving occurred last Friday night.
Investors love a predictable pattern, especially when dealing with an asset class like cryptos (and related investments) that can be off-the-charts unpredictable. The value of Bitcoin, and therefore altcoins and Bitcoin-dependent assets, tended to rise after the previous halving events.
It is, of course, dangerous to count on a historical pattern to automatically repeat itself. Yet the halving was certainly one factor in Bitcoin's recent run-up in price. What helps in this latest post-halving period is that other factors driving the popularity of cryptocurrencies, like waning geopolitical risk and still-thriving economies, are also helping to support bullish sentiment.
Time for bargain hunting?
Now that it's over and done, I don't think there will be much juice in the crypto rally, at least not in the coming days. Events and big headlines tend to disproportionately affect the values of coins, tokens, and the companies involved in them. The optimism underpinning cryptocurrencies just now should remain. However, I can't imagine piles of investors suddenly plowing into them without a compelling reason to do so.
We might, then, be in for a period of relative calm on this market. Such periods can be followed by very sharp spikes upward as we've seen lately (although, again, historical patterns might not necessarily apply). The coming days could be a good time for bargain hunters, as investors move on to other popular industries and asset classes.
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Eric Volkman has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
