Forget BTC price: The Bitcoin mining boom is quietly going parabolic
Bitcoin difficulty and hash rate stop at nothing in their quest to surge to new levels never seen before.
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Značka: difficulty
Bitcoin mining has never been more competitive even as BTC loses 13% in August
Data from on-chain monitoring resource BTC.com confirms that on Aug. 31, Bitcoin’s network difficulty hit new all-time highs.Bitcoin seals biggest difficulty jum since start of 2022Despite the recent BTC price drawdowns, Bitcoin’s network fundamentals are telling an optimistic tale as August comes to a close.Both difficulty and hash rate are climbing, reflecting conviction among miners over long-term profitability of their network participation. It also suggests that the mining sector is absorbing lower profits versus costs in the short term.Difficulty, which added 9.26% at its Aug. 31 automated readjustment, now stands at its highest ever. Competition among miners is as healthy as ever.For comparison, the last time that difficulty increased more at once was in January (9.32%), and before that, in August 2021 (13.24%).According to BTC.com, hash rate now stands at an average 221 exahashes per second (EH/s), a hair off its highest-ever recorded average reading of 223 EH/s from just before May’s Terra LUNA implosion.Bitcoin (BTC) fundamentals have delivered a “welcome uptick” which research says takes the edge off a classic bear market.“Personally, I think as more hashrate comes from the US, we’ll see a new annual seasonal trend like we used to see in China. ie hot months lower hashrate/helping to stabilize grid, cool months higher hashrate,” macro analyst Jason Deane wrote in part of a Twitter response to the difficulty readjustment.Bitcoin network fundamentals overview (screenshot). Source: BTC.comBitcoin “barely hanging on”The numbers provide a welcome counterpoint to troubled spot markets and gloomy projections for the rest of 2022.Related: BTC price top warnings emerge as 10K BTC leaves wallet after 9 yearsWith BTC/USD set to end August down almost 13%, on-chain analytics firm Glassnode said that a rebound in fundamentals would be a helpful antidote to an otherwise sour environment.“It remains plausible that Bitcoin is in a bottom formation range and would be historically similar to all past bear markets,” it concluded in the latest edition of its regular newsletter, “The Week On-Chain,” released on Aug. 30 and titled “Bitcoin Barely Hanging On.”“However, Bitcoin prices are just barely hanging on, and any uptick in the fundamentals would be a welcome change.”BTC/USD circled $20,150 at the time of writing, having recovered from sub-$20,000 levels overnight, as per data from Cointelegraph Markets Pro and TradingView.BTC/USD 1-hour candle chart (Bitstamp). Source: TradingViewThe views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
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Bitcoin mining difficulty set for 8-month record gains despite BTC price dip
Bitcoin (BTC) may have hit six-week lows of under $20,000 but its network fundamentals are anything but bearish.The latest on-chain data shows that, far from capitulating, hash rate and difficulty are making snap gains.Data supports “doozy” difficulty jumpDespite being down around 7% in a week, BTC/USD is not putting off miners, who have recently exited their own multi-month capitulation phase.Now, with hardware and competition returning to the network, fundamental indicators are firmly in “up only” mode as August draws to a close.This is neatly captured by difficulty — an expression of, among other things, the scale of competition among miners for block subsidies — which is due to increase by an estimated 6.8% next week.According to data from on-chain monitoring resource BTC.com, this will be the highest upward difficulty adjustment since January this year.Not only that, but should the 6.8% increase materialize, difficulty will jump to new all-time highs.”We may see a difficulty jump doozy enough to set a new (or close to new) ATH in a few days,” Bitcoin mining consultancy firm Blocksbridge forecast in the latest edition of its regular newsletter, “Miner Weekly,” released on Aug. 27.Blocksbridge nonetheless noted that the current climate was not easy for all network participants. Those with older equipment, for example, were feeling the squeeze thanks to spot price losses and equivalent drop in value of block subsidies and fees versus costs such as electricity.”Long story short is that the bear market is really crashing those with inefficient mining fleets,” it continued.Bitcoin mining overview (screenshot). Source: BTC.comHash rate rebounds to target all-time highBack to more bullish numbers and Bitcoin’s hash rate looks to be copying difficulty in a fresh push for new record highs.Related: Still growing — Armenian mining operator increases power plant capacityAccording to estimated data from monitoring site MiningPoolStats, hash rate stood at up to 246 exahashes per second (EH/s) as of Aug. 22, inches from all-time highs of 251 EH/s measured in late April.Hash rate is always an estimate, and its value fluctuations do not imply direct increases or decreases in miner activity.Bitcoin estimated hash rate chart (screenshot). Source: MiningPoolStatsThe views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
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Will the Fed prevent BTC price from reaching $28K? — 5 things to know in Bitcoin this week
Bitcoin (BTC) enters a new week with a question mark over the fate of the market ahead of another key United States monetary policy decision.After sealing a successful weekly close — its highest since mid-June — BTC/USD is much more cautious as the Federal Reserve prepares to hike benchmark interest rates to fight inflation.While many hoped that the pair could exit its recent trading range and continue higher, the weight of the Fed is clearly visible as the week gets underway, adding pressure to an already fragile risk asset scene.That fragility is also showing in Bitcoin’s network fundamentals as miner strain becomes real and the true cost of mining through the bear market shows.At the same time, there are encouraging signs from some on-chain metrics, with long-term investors still refusing to give in.Cointelegraph takes a look at the week’s possible market movers in a tense week for crypto, equities and more.Fed to decide on next rate hike in “another fun” weekThe story of the week, all things being equal, is no doubt the Federal Reserve rate hike. A familiar tale, the Federal Open Markets Committee (FOMC) on July 26-27 will see policy makers decide on the extent of the next interest rate move, this tipped to be either 75 or 100 basis points.U.S. inflation, as in many jurisdictions, is at forty-year highs, the its advance appears to have caught the establishment by surprise as calls for a peak are met with even larger gains.“Should be another fun one,” Blockware lead insights analyst William Clemente summarized on July 25.The interest rate decision is due July 27 at 2pm Eastern time, a diary date which could well be accompanied by increased volatility across risk assets. This has the potential to be exacerbated, one analyst warned, thanks to low summer liquidity and a lack of conviction among buyers.“Entering ECB/FOMC/Tech Earnings amid the lowest liquidity of the year. Market is back to overbought. Bulls, let it ride,” Twitter account Mac10 wrote.A previous post also flagged Q2 earnings reports as potentially contributing to a downwards move in line with previous behavior.Tech Earnings and FOMC have been catalyst for two major crashes in 2022. “This time will be different” pic.twitter.com/XgS1dDOLce— Mac10 (@SuburbanDrone) July 22, 2022“BTC and risk assets have pumped higher on FOMC events this year, only to sell off after, is this time different?” fellow analysis account Tedtalksmacro continued. “June’s FOMC meeting saw the US federal reserve deliver a 75bps hike – the single largest since 1994. More hefty hikes are expected before inflation is ‘normalised.’”The week is already feeling different to last, even before events begin unfolding — Asian markets are flat in comparison to last week’s bullish tone, one which accompanied a resurgence across Bitcoin and altcoins.While one argument says that the Fed cannot raise rates much more without tanking the economy, meanwhile, Tedtalksmacro pointed to the employment market as a target for keeping hikes coming.“Bitcoin will struggle to move past 28k until data deteriorates,” he added.Spot price fails to nail key moving averageBitcoin’s latest weekly close was something of a halfway house for bulls, data from Cointelegraph Markets Pro and TradingView shows. While managing its best performance in over a month, BTC/USD missed out on reclaiming the essential 200-week moving average (MA) at $22,800.BTC/USD 1-hour candle chart (Bitstamp). Source: TradingViewAfter the close, which came in at around $22,500, Bitcoin began falling to the bottom of its latest trading range, still lingering below $22,000 at the time of writing. Good morning legends Range high dump during the overnight session on $ETH and $BTC .. Looking for some relief if we can hold $1460 on $ETH and $21,700 on $BTC Chart updates to come — Crypto Tony (@CryptoTony__) July 25, 2022
“Observing IF we find support at $21,666 horizontal. Patience,” popular trader Anbessa told Twitter followers in his latest update.Fellow account Crypto Chase meanwhile suggested that a return to the 200-week MA would result in further modest upside.“Chopping around the Daily S/R (red box) with an inability to flip 22.8K (Daily resistance) to support. Multiple attempts to do so, but failing so far,” he wrote alongside explanatory charts. “If price pushes above again and finds acceptance, I’ll watch 22.8K to become support for potential long entry to 23.2K.”A later update eyed $21,200 as a potential bearish target, this also forming a support/resistance level on the daily chart.At $21,900, however, Bitcoin still remains around $1,200 higher versus the same point a week ago. BTC/USD 1-week candle chart (Bitstamp) with 200-week MA. Source: TradingViewElsewhere, the latest price action was not enough to change long-term views. For Venturefounder, a contributor at on-chain analytics firm CryptoQuant, a macro bottom was yet to appear, this potentially coming in as low as $14,000.“Inline with the past halving cycles, this is still my most viable forecast for Bitcoin before next halving: BTC will capitulate in the next 6 months & hit cycle bottom (anywhere between $14-21k), then chop around in $28-40k in most of 2023 and be at ~$40k again by next halving,” a retweeted forecast originally from June reiterated.Difficulty returns to March levelsIn a sign that miners’ troubles due to price weakness may only just be beginning, upheaval is now visible across the Bitcoin network.Difficulty, the measure of competition among miners which adjusts itself relative to participation, has been declining since late June and is now back at levels not seen since March.The most recent adjustment was particularly noticeable, knocking 5% off the difficulty total and heralding change in miner activity. That was the largest single drop since May 2021, and the next, due in ten days’ time, is currently estimated to take difficulty down another 2%.As arguably the most important aspect of the Bitcoin network itself, difficulty adjustments also set the scene for recovery by leveling the playing field for miners. The lower the difficulty, the “easier” — or less energy-intensive — it is to mine BTC due to there being less competition overall.For the meantime, however, the need to stay afloat remains a preoccupation, data shows. According to CryptoQuant, miners sent 909 BTC to exchanges on July 24 alone, the most in a day since June 22 and 5% difficulty decrease.A turnaround for miners thus remains out of sight this week.Bitcoin network fundamentals overview (screenshot). Source: BTC.comAs Cointelegraph additionally reported, it is not just the BTC price which is giving miners a hard time under current conditions.Congratulations to the MVRV-Z scoreOne of the hottest on-chain metrics in Bitcoin has just crossed what is arguably its most important level — zero.On July 25, Bitcoin’s MVRV-Z Score returned to negative territory after a brief week above, in so doing falling into the zone typically reserved for macro price bottoms. #Bitcoin $BTC MVRV Z-Score just crossed 0.Before: 0.010 – > Now: -0.000View metric:https://t.co/IBVIM3J84o pic.twitter.com/DRGqIxKW7w— glassnode alerts (@glassnodealerts) July 25, 2022
MVRV-Z shows how overbought or oversold BTC is relative to “fair value” and is popular thanks to its uncanny ability to define price floors.Its return could signal a fresh period of price pressure, as accuracy in catching bottoms has a two-week margin of error.At the beginning of July, Cointelegraph reported on MVRV-Z giving a worst case scenario of $15,600 for BTC/USD this time around.Sentiment cools from four-month highsFor the crypto market, the past week may well have been a brief period of irrational exuberance if sentiment data is to be believed.Related: Top 5 cryptocurrencies to watch this week: BTC, ETH, BCH, AXS, EOSThe latest numbers from the Crypto Fear & Greed Index show a steady decline from what has been the most positive market sentiment since April.As of July 25, the Index stands at 30/100 — still described as “fear” driving the mood overall but still five points above the “extreme fear” bracket in which the market previously spent a record 73 days. Sentiment has nonetheless made quite the comeback since mid-June, when Fear & Greed hit some of its lowest levels on record at just 6/100.Crypto Fear & Greed Index (screenshot). Source: Alternative.meThe views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
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BTC mining costs reach 10-month lows as miners use more efficient rigs
The cost of mining one Bitcoin (BTC) has fallen to ten-month lows as mining hardware becomes more efficient, and difficulty has dropped 6.7% since its May peak.On July 13, strategists from JPMorgan led by Nikolaos Panigirtzoglou told investors that Bitcoin production costs have fallen to around $13,000 from $24,000 at the beginning of June. This is the lowest it has been since September 2021, according to the analysts citing a chart from Bitinfocharts, and comes as mining difficulty has fallen from its May highs of 31.25T to 29.15T. Lower Bitcoin production costs can potentially ease miner selling pressure and improve profitability. However, the strategists were still bearish, stating “the decline in the production cost might be perceived as negative for the Bitcoin price outlook going forward,” according to Bloomberg.They added that the production cost is perceived by some analysts as the lower bound for BTC price range in a bear market. Several analysts have predicted BTC prices to fall to around $13,000, which would align with the 80%+ drawdowns in the previous two bear markets. Bitcoin is currently trading down 70% from its November all-time high.Bitcoin production cost peaked just after the price peaks in April and November 2021 and has fallen back as markets did, so it is correlated but lags price movements.The drop in production cost has been linked to a decline in electricity consumption. Cambridge University’s Bitcoin energy consumption index currently reports that the network’s estimated daily power demand is 9.59 Gigawatts. This is a decline of 33% over the past month and is down 40% from the 2022 peak demand of almost 16 GW in February.Source: Cambridge UniversityAdditionally, a significant number of miners have powered down older, more inefficient mining rigs as they have become unprofitable to operate due to surging energy prices and a collapse in BTC prices.According to Asicminervalue, the Bitmain Antminer E9, just released this month, is one of the most efficient units on the market, with a maximum hash rate of 2.4Gh/s for a power consumption of 1,920 Watts.Related: Bitcoin miners sell their hodlings, and ASIC prices keep dropping — What’s next for the industry?On the flip side, miners have been hit with the double whammy of increasing global energy prices and tanking BTC prices. This has caused mining profitability to slump by 63% since the beginning of the year. Bitinfocharts reports that mining profitability is currently at its lowest levels since October 2020 at $0.095 per day per terahash per second.However, the fall in production cost may prevent a further fall in profitability and could even reverse that trend in the coming months.
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Largest difficulty drop since July 2021 — 5 things to know in Bitcoin this week
Bitcoin (BTC) is off to a better start than most this week as bulls avoid serious losses into the weekly close.Still heavily tied to declining stock markets, the largest cryptocurrency is nonetheless defending $30,000 on May 23 and eyeing the top of its post-LUNA trading range.While there are no signs of an impending miracle price recovery, some are hoping that upside will feature before any form of reversion to a downtrend.Macro conditions remain tenuous — and the week of the World Economic Forum’s (WEF) Annual Meeting is due to add fuel to the fire surrounding tolerance of Bitcoin.Add to that the largest downward difficulty adjustment since last July and it becomes clearer that Bitcoin is battling for strength on multiple fronts.What could happen in the coming days? Cointelegraph presents several factors to keep in mind when it comes to BTC price action.BTC price “nuke” still on the tableIn a refreshing contrast to recent weeks, Bitcoin managed to show strength following the weekly close into May 23. Despite still sealing a record eighth weekly red candle in a row, the lack of breakdown allowed BTC/USD to instead retain $30,000.For Cointelegraph contributor Michaël van de Poppe, the trend was already in evidence ove the weekend.Still good on #Bitcoin.Great breakout at the $29.3K area, resulting in a run towards $30.2K, which became resistance (as disclosed in the previous tweet).Consolidation now. Break would mean $31.1K and potentially $32.8K + #altcoin momentum. pic.twitter.com/Ia9svBR3Lf— Michaël van de Poppe (@CryptoMichNL) May 22, 2022Given the overall picture with stocks correlation and monetary tightening forcing them down, not everyone was confident in upside continuation on Bitcoin.BTC weekly:Alot of resistance above.Not so much support below.This is not a prediction. pic.twitter.com/L34fV2sA7M— Nunya Bizniz (@Pladizow) May 23, 2022
“My preferred Bitcoin scenario is a nuke straight to $22k before big bounce close to $40k,” popular Twitter trader Nebraskan Gooner told followers on the day. “This would provide the best opportunity for bear market bounce and catch a lot of people off guard. Good to monitor all scenarios especially with everyone being so confident of a bounce.”That perspective chimes with existing demands for Bitcoin to beat its previous bottom of $23,800 set on the back of the Terra LUNA meltdown.Late last week, Filbfilb, co-founder of trading suite Decentrader and long-time market commentator, said that it was time to accept that the largest cryptocurrency was in a bear market.“Should we lose the current support at $28,670 then the final support before new lows sits at $26,512,” he added at the time, identifying support and resistance levels which have yet to see a retest. “To the upside, should price break through the daily resistance then the lower boundary of the Log Growth channel is at $34,270.”In the meantime, regardless of the strength of $30,000 this week, there should be relief before any potential series reversal, popular Twitter account IncomeSharks argued.#Bitcoin – You can call it a dead cat bounce, relief rally, bearish re-test, or the bottom being in, whatever you want to say…. Bulls or bears should at least agree on us getting some upside first. pic.twitter.com/o04UwAgDPn— IncomeSharks (@IncomeSharks) May 23, 2022
At the time of writing, BTC/USD circled $30,500, data from Cointelegraph Markets Pro and TradingView showed.Showdown as WEF plans to “change” BitcoinThe first in-person Annual Meeting of the World Economic Forum since the start of the Coronavirus pandemic is the macro trigger of the week.As the economic elite gathers in Davos, Switzerland, from May 22 through May 26, markets are gearing up for potential volatility on the back of their forthcoming remarks.For Bitcoiners, the event tends to be a stressful one as the industry attempts to gauge sentiment among traditional finance heavyweights.This year is likely no different — just one month ago, the WEF released a video arguing that Bitcoin should change its Proof-of-Work algorithm to Proof-of-Stake for environmental purposes.An accompanying campaign, “Change the Code,” from Ripple co-founder and Executive Chairman Chris Larsen and Greenpeace USA, is attempting to gain mainstream support for the swap.Moreover: “Experts” have found a way to move #Bitcoin from a decentralised network to a centralised, so they can control it. This “change the code not the climate” campaign introduced by the WEF and financed by the wealthy has only one goal: Take over the control of #Bitcoin. pic.twitter.com/kMkXDLjLWc— Carl ₿ MENGER ⚡️. (@CarlBMenger) May 8, 2022
The implosion of stablecoin TerraUSD (UST) this month further dragged crypto into the crosshairs of the financial establishment. Christine Lagarde, President of the European Central Bank, claimed that all cryptocurrencies are “worth nothing” and therefore — perhaps paradoxically — require regulation.“It is based on nothing, there is no underlying assets to act as an anchor of safety,” she told Dutch television show College Tour in an interview released May 22.Both the WEF and Lagarde have come under fire from Bitcoin sources, with even firms such as Swiss native Bitcoin Suisse showing little public tolerance for their criticism.How much do the attendees of the #WorldEconomicForum really know about #Bitcoin, #crypto and the potential of #blockchain ⁉️ #WEF22 To help them (& Christine @Lagarde) out – we offer a short primer! (Help us spread the word @thecryptovalley @TheBlock__ @crypto @wef @FT)— Bitcoin Suisse (@BitcoinSuisseAG) May 22, 2022
Just like El Salvador President Nayib Bukele’s Bitcoin-focused summit attended by 44 countries last week, meanwhile, this week’s Davos event will see a conspicuous competitor champion Bitcoin over fiat currency.The Oslo Freedom Forum, to be held from May 23 through May 25 in Oslo, Norway, describes itself as “a global gathering of activists united in standing up to tyranny.”Speaking at the event are a host of Bitcoin’s best-known names, including economist Lyn Alden, Strike CEO, Jack Mallers and Elizabeth Stark, co-founder and CEO of Lightning Labs.“Two international forums starting tomorrow are on the surface similar, but diametrically opposed. The World Economic Forum and the Oslo Freedom Forum. A necessity of manipulated money is coercion, and the loss of individual rights and freedoms. See you in Oslo,” entrepreneur Jeff Booth, also due to attend, tweeted over the weekend. Difficulty reflects conditions catching up with minersMajor Bitcoin price drawdowns are not without their consequences.According to the latest estimates, Bitcoin’s network fundamentals are now due to adjust for the trip to $30,000.Difficulty, which reflects changing dynamics among miners, will reduce by around 3.3% at its next automated readjustment this week. While modest compared to some adjustments, the change will nonetheless be the largest downward shift since July 2021.The reason is simple — Bitcoin price action has not only headed south, but is challenging miners’ profitability.Miner production cost is key in determining their ongoing activity, and a decline below the number, currently at around $26,000, would cause larger shifts in network fundamentals in order to maintain profitable participation. According to monitoring resource MacroMicro, as of May 21, it cost an average of $26,250 to mine one bitcoin.Despite possible profitability pressure based on estimated data, miners are not showing signs of capitulation, still keeping BTC sales to a minimum, according to the latest figures from on-chain analytics platform Glassnode.Miner outflows — coins leaving miner wallets — hit a one-month low on May 23.Bitcoin’s mining hash rate, meanwhile, has come off its all-time highs to circle an estimated 233 exahashes per second (EH/s) as of May 23.For Ki Young Ju, CEO of fellow analytics platform CryptoQuant, the overall trend remains similarly clear.“While BTC price drops -56% since Nov 2021, hashrate increased +75%,” he noted. “The market is cold, but the fundamentals are full of heat from mining rigs.”Bitcoin miner outlow volume 7-day moving average chart. Source: Glassnode/ TwitterOn-chain volume hits multi-month lowsBitcoin has been famously boring for the mainstream consumer base throughout 2022 thanks to price action, but now, even participation from existing investors is waning.On-chain data shows that volumes have been in steady decline, with the notable exception of the post-LUNA panic.Glassnode, which tracks seven-day moving average on-chain transaction volumes, recorded nine-month lows on May 23.From May 9 onwards, the moving average began falling precipitously, and by May 22 had fallen 70%.While CryptoQuant’s Ki underscored the lack of interest among retail buyers, fellow analyst Willy Woo argued that it was the big players that really held sway over market fluctuations.“Very little of the volume and therefore impact on price comes from retail needing to buy groceries,” he wrote as part of a response during a Twitter debate last week. “5% of the supply is owned by people who hold less than $30k of BTC, the bulk of volume is larger investors who sell to hedge market risk.”Bitcoin total transfer volume 7-day moving average chart. Source: GlassnodeMarket sentiment back at rock bottomIn contrast to some modest price strength, Bitcoin is anything but bullish if looked at from the point of view of sentiment.Related: Top 5 cryptocurrencies to watch this week: BTC, BNB, XMR, ETC, MANAAccording to classic sentiment gauge, the Crypto Fear & Greed Index, the majority of the market is bracing for fresh downside.At 10/100, the Index is back in the lower segment of its “extreme fear” zone which has historically appeared at price bottoms.Fear & Greed is no stranger to bottom signals this year, having managed to drop to just 8/100 — the lowest since March 2020 — earlier this month.Analyzing sentiment regarding the highly-correlated S&P 500, trader, entrepreneur and investor Bob Loukas shed some light on what could be a copycat pattern for Bitcoin.Two observations on sentiment in equities. Absolute extreme bearish sentiment likely means a sharp counter trend rally is very close.Consistent bearish sentiment confirms this is a cyclical bear market of duration, not a buy the dip just yet. pic.twitter.com/Jpfo9GUSMr— Bob Loukas (@BobLoukas) May 22, 2022
Last week, meanwhile, popular trader and analyst Rekt Capital argued that a more substantial price change would be necessary to change sentiment in a way that matters.“It’s easy to become bullish on BTC on a green day & bearish on a red day. But BTC is still just ranging between $28K-$32K,” he tweeted. “This will continue until either of these levels is broken. Intra-range moves aren’t substantial enough to dictate changes in sentiment.”Crypto Fear & Greed Index vs. BTC/USD chart (screenshot). Source: LookIntoBitcoinThe views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
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BTC stocks correlation 'not what we want' — 5 things to know in Bitcoin this week
Bitcoin (BTC) starts the second week of April with a whimper as bulls struggle to retain support above $40,000.After a refreshingly low-volatility weekend, the latest weekly close saw market nerves return, and in classic style, BTC/USD fell in the final hours of Sunday.There is a feeling of being caught between two stools for the average hodler currently — macro forces promise major trend shifts but are being slow to play out, while “serious” buyer demand is also absent from cryptoassets more broadly.At the same time, those on the inside show no hint of doubt about the future, as evidenced by all-time high Bitcoin network fundamentals and more.The combination of these opposing factors is price action that simply does not seem to know where to go next. Can something change in the coming week?Cointelegraph takes a look at five potential Bitcoin price cues as a retest of $40,000 looms closer.No “massive drawdown” for BTC?Monday is starting out with a reclaim of $42,000 for BTC/USD, which the pair briefly lost overnight as it dipped into the weekly close.Hitting $41,771 on Bitstamp in the process, Bitcoin thus saw its lowest levels in weeks, matching those from March 23.BTC/USD 1-hour candle chart (Bitstamp). Source: TradingViewIn doing so, the largest cryptocurrency likewise gave up all of its gains from the intervening period to fall back to the top of its trading range from last month. This could end up being a retest of previous resistance as support, however, and instead of fearing the worst, many traders are hopeful that a reversal would soon kick in.“Bullish retest of flipped weekly level, finex whale filling bids, I’m buying the dip. If you want to wait for confirmation you can wait for a monthly close to confirm,” popular Twitter user Credible Crypto wrote as part of comments overnight.Credible Crypto was commenting on both Bitfinex whale buying and fresh chart data, which shows that Bitcoin’s Aroon indicator has flipped bullish in recent days.Designed to identify uptrends or downtrend in an asset, Aroon has only delivered such bearish-to-bullish “crosses” six times since 2017 — the time of Bitcoin’s previous blow-off top.Pretty good odds of you ask me. Aroon is designed to act like both a smooth indicator and exponential one due to its behavior toward time instead of price. I’m not expecting a massive drawdown.— Otsu (@OtsukimiCrypto) April 11, 2022As Cointelegraph reported, trader and analyst Rekt Capital also had plenty of reasons to adopt a bullish thesis for Bitcoin, but at around $42,150 the weekly close ultimately disappointed compared to his required $43,100.“A BTC Weekly Candle Close like this and the retest of ~$43.100 as new support would be successful,” he explained alongside a chart Sunday. “Therefore, BTC would be positioned for a move higher inside the ~$43100-$52000 range, as per the previous blue circle.”Cointelegraph contributor Michaël van de Poppe meanwhile also noted that the late dip Sunday had closed the potential for a CME futures gap to provide a short-term price target at the start of Monday trading.Stocks pressured across the boardIt’s a gloomy day for stocks so far as Asia leads with widespread losses thanks in no small part to China’s latest Coronavirus lockdowns.Both the Shanghai Composite Index and Hong Kong’s Hang Seng fell over 2% in morning trading.In Europe, markets were yet to open at the time of writing, but the ongoing geopolitical tensions focused on Russia showed no signs of change. A glimmer of hope for the euro came in the form of a potential lead for incumbent French President Emmanuel Macron against far right rival Jean-Marie Le Pen in polls.Beyond the short term, however, analysts are eyeing concerning trends: rapidly increasing inflation, bond market losses and a seeming inability for central banks to respond so far.The European Central Bank (ECB) is due to meet this week with a key focus on inflation control — ending asset purchases and raising interest rates.The biggest bond bubble in 800yrs continues to deflate after the start of the Fed’s rate-hike cycle, ahead of next week’s #ECB meeting & as rising #inflation shakes up bond mkts. Value of global bonds has dropped by another $960bn this week, bringing total loss from ATH to $6tn. pic.twitter.com/g78Pu2dyLo— Holger Zschaepitz (@Schuldensuehner) April 10, 2022
The situation underscores the difficulties faced by stocks and risk assets in the current climate. As commentators agree that the inflationary environment and associated central bank measures will reduce demand for Bitcoin and crypto, the true extent of the economic reality is already clear.In a previous Twitter post last week, Holger Zschaepitz revealed that for all the gains in the S&P 500, for example, the Fed’s asset purchases mean that progress has in fact been flat since the Global Financial Crisis.“Just to put things into perspective: The S&P 500 may have hit a new ATH today, but if you put the index in relation to the Fed’s balance sheet, it is trading at the same level as in 2008, so equities have traded sideways since 2008, basically counteracting balance sheet expansion,” he wrote.Down together?For Arthur Hayes, ex-CEO of derivatives giant BitMEX, the bullish case for Bitcoin as a store of value in the face of failing fiat is still there.The problem is that such a scenario is not reality — yet.In his latest blog post released Monday, Hayes repeated warnings that pain would precede gain for the average investor with significant risk asset exposure.The future could well see a shift away from U.S. dollar hegemony toward different assets, by nation states and individuals alike, but for the meantime, macro forces will continue taking their toll on crypto.If stocks are due to dive as central banks act, notionally to combat inflation, crypto’s increasing correlation to them means only one thing.“The short-term (10-day) correlation is high, and the medium term (30-day and 90-day) correlations are moving up and to the right. This is not what we want,” Hayes argued about crypto correlations with the Nasdaq 100 (NDX). “For me to hoist the flag in support of selling fiat and buying crypto in advance of an NDX meltdown (30% to 50% drawdown), correlations across all time frames need to trend demonstratively lower.”Could equities really see half their value removed as a result of the Fed and its actions? It would be anyone’s guess, Hayes said.“Down 30%? … Down 50%? … your guess is as good as mine,” he added.“But let’s be clear– the Fed isn’t planning to grow its balance sheet again any time soon, meaning equities ain’t going any higher.”Federal Reserve balance sheet as of April 4 (screenshot). Source: Federal ReserveSentiment diverges from traditional marketsWith the macro gloom on the horizon, it is no surprise that market sentiment is taking a beating. Having sensed “greed” across crypto at the end of March, the Crypto Fear & Greed Index is now firmly back in “fear” territory.An analog of the traditional market Fear & Greed Index, the metric has shed half its normalized score in under two weeks as cold feet return to traders.On Monday, Crypto Fear & Greed measured 32/100, while its traditional market counterpart was higher at 46/100, defined as “neutral.”Deserved or not, Van de Poppe meanwhile reminded readers not to trade based on sentiment cues.“Everyone was super bullish on the markets, but now the markets start to correct, and the fear takes over,” he summarized. “The sentiment isn’t a great indicator of how you should trade usually.”Crypto Fear & Greed Index (screenshot). Source: Alternative.meFundamentals keep the faithA glimmer of hope comes from a familiar source this week — for all the price drawdowns, Bitcoin’s network difficulty is only due to decrease by 0.4% in the next few days.Related: Top 5 cryptocurrencies to watch this week: BTC, NEAR, FTT, ETC, XMRArguably the most important aspect of the Bitcoin network’s self-maintaining paradigm, difficulty will adjust downward from all-time highs to reflect changes in mining composition.The adjustment’s small size suggests that miners remain financially buoyant at current levels and are not struggling despite last week’s 10% BTC/USD dip.Bitcoin difficulty 7-day average chart. Source: BlockchainFurther data supports the argument, with hash rate estimates from monitoring resource MiningPoolStats likewise lingering at record highs.As Cointelegraph reported, mining continues to attract major investment, including from Blockstream, which last week announced a solar-powered farm set to generate 30 petahashes per second in hash rate once operational.Bitcoin estimated hash rate chart (screenshot). Source: MiningPoolStatsThe views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
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Bitcoin difficulty reaches all-time high, hash rate up 45% in 6 months
The Bitcoin network has hit yet another all-time high in mining difficulty after a steady climb since last July’s lows.On-chain analysis tool CoinWarz indicated on Feb. 18 that mining difficulty reached a new high of 27.97 trillion hashes (T). This is now the second time in three weeks that Bitcoin (BTC) has hit a new ATH in terms of difficulty. On Jan. 23, difficulty reached 26.7 T when hash rates were at 190.71 EH/s (exahashes per second).Higher difficulty means there is more competition among miners to confirm a block and extract a block reward. As a result, miners have recently begun selling off coins or their company’s stock in order to keep their cash reserves intact. Most notably, Marathon Digital Holdings filed on Feb. 12 to sell $750 million in shares of its company. Hash rate for the network has also hit a new ATH according to data from Blockchain.com, which indicates a hash rate of 211.9 EH/s. Different measurement tools have recorded different hash rate highs over the last few weeks. YCharts tools displayed a hash rate ATH of 248.11 EH/s on Feb. 13.Of the known global mining pools, AntPool and F2Pool are have contributed the most hash power. Antpool accounts for 96 blocks mined over the last four days while F2Pool accounts for 93 according to data from Blockchain.com.Regardless of the measuring tools used, both hash rate and mining difficulty have been on the upswing since hitting deep troughs last July. At the time, the hash rate bottomed out at about 69 (EH/s according to CoinWarz while mining difficulty reached a low of 13.6 trillion hashes (T). Related: ‘Up only’ for BTC fundamentals — 5 things to watch in Bitcoin this weekA greater hash rate, however, means greater security for the network. The more hash power the network uses, the more distributed the work is for each transaction that takes place on-chain. This dilemma between miners and securing the network and deriving enough profits is likely to continue to play out as they determine the feasibility of their current operations.
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Bitcoin sees first downward difficulty move in 5 months amid 'uncertainty' over hodler spending
Bitcoin (BTC) is in a tight battle between bulls and bears and the network is now reacting, data shows.Trackers reveal that this week, Bitcoin difficulty snapped an 18-week green streak to post its first decrease since July.Difficulty adjusts to 20% BTC price dip Amid cyclical short-term price action, concern remains that Bitcoin is not done retracing from its latest $69,000 all-time highs.Having surprised analysts and even rejected one lifelong price model, BTC/USD over the past month feels like uncharted territory — despite roughly doubling year to date.“With Bitcoin now over 20% below the all-time-high, headlines in traditional media have declared that Bitcoin has entered a bear market,” on-chain analytics firm Glassnode summarized in its latest weekly newsletter, “The Week On-Chain.”“However, it may surprise some readers that this current market correction is actually the least severe in 2021. Some might even say business as usual for a Bitcoin HODLer.”Nonetheless, network fundamentals are now taking the latest dip into account. On Dec. 28, difficulty fell 1.5% — after rising continually for nine straight periods. The next adjustment is currently slated to produce a further decrease of nearly 2%.Bitcoin difficulty 7-day average chart. Source: BlockchainLong-term holder spending sparks “uncertainty”Surveying the landscape, Glassnode did not rule out further price declines. Related: Bitcoin tests traders’ nerves as analyst reissues $400K BTC price forecastA combination of long-term holder selling, high open interest on derivatives markets and other phenomena could spark a continuation of the downtrend to new local lows.“Open interest leverage in options and futures at or near ATHs, which is cause for some concern regarding heightened “flush out” potential. Funding rates suggest an only slightly positive bias, making both a long- or short-squeeze plausible scenarios,” it concluded.Regarding LTH behavior, it added:“Long-Term Holders have distributed 5.8% of the supply accumulated since March and some uncertainty exists based on their spending patterns.”Long-term holder spent price annotated chart. Source: GlassnodeDiscussing open interest, meanwhile, analyst Willy Woo noted that in a post-exchange-traded fund (ETF) environment, activity may just remain higher and not necessarily signal turbulence on the horizon.“IMO it doesn’t necessarily need to be flushed,” he tweeted. “It could be a sign of the time with and uptake of the cash and carry trade post futures ETFs.”BTC/USD circled $56,000 at the time of writing on Dec. 2 after spending the past 24 hours repeating a run to $59,000 and subsequent rejection.
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