Bitcoin runs out of steam ahead of halving milestone

Bitcoin appears to be running out of steam just before one of the most anticipated milestones among cryptocurrency enthusiasts.

The largest digital token tumbled over the weekend, declining about 13% to about $8,675. It rebounded to about $8,840 as of 10am in New York trading on Monday. The decline took place ahead of a closely watched technical event known as its halving, when the rewards miners receive for processing transactions will be cut in half as soon as later Monday.

“It’s likely that we’re going to see increased volatility through May, with the pandemic, ongoing stimulus measures and the halving,” Rich Rosenblum, co-head of trading at crypto market maker GSR, said in an e-mail. “The record open interest for futures and options at multiple exchanges adds to this. The market is in a state of information and position overload, worsening the potential for volatile moves.”

Still, bitcoin’s up near 25% in 2020 and among its newest fans is famed macro investor Paul Tudor Jones, who said he’s been buying bitcoin as a hedge against the inflation he sees coming from central bank money-printing.

“It’s not the great cure for all the monetary ills, et cetera. It’s a great speculation,” Jones, the founder and CEO of Tudor Investment, said in an interview with CNBC on Monday. He’s got over 1% of his assets in bitcoin, though it might end up being a top performer within his portfolio, he said.

Bitcoin, which is a little more than a decade old, has not stood the test of time, said Jones, but the digitisation of the world “clearly benefits” the token. He sees an expanding user base for the cryptocurrency, a hallmark of every bull market, and anyone buying bitcoin is betting that universe will continue to broaden.

“We’re watching the birthing of the store of value — and whether that succeeds or not, only time will tell,” said Jones in the interview. “What I do know is, every day that goes by and bitcoin survives, the trust in it will go up.”