The Bitcoin (BTC) price has seen a strong recovery to $9,887 since mid-March, rising by more than than $6,000 within a span of 2 months. The rapid upsurge was caused in anticipation of the block reward halving that is set to occur on May 12.

The halving volition continue to exist the main narrative around the Bitcoin toll trend throughout the next two years, as it direct affects the supply of BTC. It reduces the rate in which new BTC is mined past half, causing its supply in the market to drop.

While a positive long-term result of the halving on the Bitcoin price is undoubtable, analysts all the same anticipate that three principal factors volition cause a drop-off before long after the halving occurs.

Bitcoin is overbought

The Relative Strength Index (RSI), an indicator that is used to determine whether an asset is oversold or overbought, is flashing highly overbought weather for Bitcoin.

On the daily chart, the RSI hovers at 79. Any reading above 75 is considered overbought, and below 30 is acknowledged as being oversold.

The concluding time the RSI was this high was on February 9, when the price of BTC was at $10,100. At the fourth dimension, BTC rose to equally loftier every bit $10,500, but ultimately fell to $8,000 within a month.

Bitcoin RSI over the BTC-USD daily chart. Source: TradingView

On March 12, 33 days later on the RSI of BTC surged past 75, the Bitcoin cost dropped to every bit low every bit $3,600.

There are too counterarguments for high RSI levels. Some debate that in an extended bull market, Bitcoin tin can remain oversold for longer periods of fourth dimension than in normal cost cycles. Hence, depending on Bitcoin's price movement, the RSI can act as a positive catalyst for the dominant cryptocurrency.

Previous Mail service-halving price cycles provide insight

Later on the second Bitcoin halving In 2022, the price of BTC immediately dropped and analysts predict that the upcoming halving will meet a similar result.

A sell-off following a highly anticipated event typically happens in the cryptocurrency market, where investors respond with a sell-the-news approach. When over-leveraged investors are forced to lower their positions and the hopium around the effect subsides, the Bitcoin toll tends to rebound over again.

Logan Han, a hedge fund director and cryptocurrency investor, suggested that the Bitcoin price is probable to react with a sell-off afterward the halving.

A possible Bitcoin sell-off fractal post-halving. Source: Logan Han

Another cryptocurrency trader known every bit Satoshi Flipper said that following the retest of the $9,400 resistance level, BTC may test the mid-$viii,000 region after the halving.

A drop to the $seven,000 to $8,000 range in late May would get in line with previous Bitcoin cost cycles in 2022 and 2022, when the first and second halvings were activated.

Possible Bitcoin cost trend scenario postal service-halving. Source: Satoshi Flipper

A stock market place correction could dent Bitcoin price

The U.S. stock market demonstrated business firm momentum in recent weeks as the U.Southward., Spain, and Italia set up to reopen their economies.

In a contempo interview with ABC, U.S. President Donald Trump reaffirmed his decision to reopen the U.S. every bit shortly as possible, relying on social distancing to reduce the spread of coronavirus.

Similar to the cryptocurrency market place, in that location exists a stiff possibility that the stock market place responds with a sell-off when the economy reopens.

Currently, a number of high-contour billionaire investors are holding on to cash and hedge positions despite the contempo recovery of stocks. This shows that the confidence towards a complete market place rebound is relatively low.

A stock market pullback in the most-term as a result of poor Q2 earnings, a decline in global economic growth, and the struggle of major conglomerates could add selling force per unit area on high-risk assets like unmarried-stocks and Bitcoin.