• Latest
This Metric Suggests Bitcoin Has Bottomed Out

This Metric Suggests Bitcoin Has Bottomed Out

Januar 10, 2020
6 Questions for Rene Reinsberg of Celo – Cointelegraph Magazine

6 Questions for Rene Reinsberg of Celo – Cointelegraph Magazine

März 31, 2023
Judge denies SEC motion to keep Hinman docs secret in Ripple case

Judge denies SEC motion to keep Hinman docs secret in Ripple case

März 31, 2023
The ultimate guide to Miami – Cointelegraph Magazine

The ultimate guide to Miami – Cointelegraph Magazine

März 31, 2023
Dr. Jane Thomason – Cointelegraph Magazine

Dr. Jane Thomason – Cointelegraph Magazine

März 31, 2023
1658007797 celsius is bankrupt with 12b balance sheet hole su zhu.jpg

Celsius is bankrupt with $1.2B balance sheet hole, Su Zhu returns to Twitter and OpenSea purges 20% of employees: Hodler’s Digest, July 10-16

März 31, 2023
6 Questions for Lisa Fridman of Quadrata – Cointelegraph Magazine

6 Questions for Lisa Fridman of Quadrata – Cointelegraph Magazine

März 31, 2023
Jed McCaleb empties XRP wallet after eight-year selloff

Jed McCaleb empties XRP wallet after eight-year selloff

März 31, 2023
Celsius has finally filed for bankruptcy: Law Decoded, July 18-25

Celsius has finally filed for bankruptcy: Law Decoded, July 18-25

März 31, 2023
The ‘godfather of crypto’ risked lifetime in jail, laying foundation for Bitcoin – Cointelegraph Magazine

The ‘godfather of crypto’ risked lifetime in jail, laying foundation for Bitcoin – Cointelegraph Magazine

März 31, 2023
SEC objects to XRP holders aiding Ripple defense

SEC objects to XRP holders aiding Ripple defense

März 31, 2023
Blockchain technology is transforming the real estate market – Cointelegraph Magazine

Blockchain technology is transforming the real estate market – Cointelegraph Magazine

März 31, 2023
1658612147 nfts banned in minecraft sec lists 9 tokens as securities.jpg

NFTs banned in Minecraft, SEC lists 9 tokens as securities and 3AC founder blames cockyness for company meltdown: Hodler’s Digest, July 17-23

März 31, 2023
  • Home
  • Coin Market Cap
  • Bitcoin
  • Ethereum
  • Ripple
  • Litecoin
  • Alt Coin
  • Business
  • Trading
  • Mining
CoinNewsDaily
  • Home
  • Coin Market Cap
  • Bitcoin
  • Ethereum
  • Ripple
  • Litecoin
  • Alt Coin
  • Business
  • Trading
  • Mining
No Result
View All Result
  • Home
  • Coin Market Cap
  • Bitcoin
  • Ethereum
  • Ripple
  • Litecoin
  • Alt Coin
  • Business
  • Trading
  • Mining
No Result
View All Result
CoinNewsDaily
No Result
View All Result
Home Tech

This Metric Suggests Bitcoin Has Bottomed Out

coinnewsdaily by coinnewsdaily
Januar 10, 2020
in Tech
0
This Metric Suggests Bitcoin Has Bottomed Out
190
SHARES
1.5k
VIEWS
Share on FacebookShare on Twitter

Bitcoin likely carved out a major price bottom in December, according to a non-price metric, which has proved to be a reliable price indicator in the past. 

The leading cryptocurrency is currently trading above $7,700, having hit eight-month lows below $6,500 in mid-December. While the bounce is encouraging, the cryptocurrency remains trapped in a six-month-long bearish channel. Thus, the technical bias is still bearish. 

Related articles

Bankman-Fried faces down roomful of futures industry insiders at CFTC roundtable

Bankman-Fried faces down roomful of futures industry insiders at CFTC roundtable

Mai 25, 2022
Central African Republic to launch official crypto hub ‘Sango’

Central African Republic to launch official crypto hub ‘Sango’

Mai 24, 2022

However, bitcoin’s difficulty adjustment – a measure of how difficult it is to find blocks on the blockchain – indicates the bear market, which began at highs above $13,800 in June 2019, may have bottomed out near $6,500 in December. 

The mining difficulty fell from 13.7 trillion in November to 13 trillion in December – the first downward adjustment in 12 months – according to data source data.bitcoinity.org. 

Bitcoin mining difficulty
Source: Bitcoinity.org

Historically, negative monthly difficulty adjustments have marked major price bottoms, according to popular analyst “Nunya Bizniz.” 

For instance, the sell-off from the record high just shy of $20,000 seen in December 2017 ran out of steam near $3,100 in December 2018 with the consecutive monthly downward difficulty adjustments at the end of 2018, as seen below (red lines).

Price, mining difficulty, halving
Source: Chart by Nunya Bizniz (@Pladizow)

Going further back, the difficulty dropped from 0.0494 trillion (49.4 giga) in April 2015 to 0.0488 trillion (48.8 giga) in May 2015. Interestingly, bitcoin’s decline from the December 2013 high of $1,153 bottomed out around $200 in April-May 2015. 

The cryptocurrency traded in a sideways manner for a couple of months before beginning an ascent in October 2015. The peculiar behavior could be explained by monthly declines in difficulty caused by miner capitulation. 

Note that mining difficulty is adjusted higher or lower every two weeks in correspondence with the amount of the computational power (hash rate) dedicated to mining. The latter is dependent on mining profitability, which is heavily influenced by price. 

Thus, a monthly mining difficulty decrease is essentially the result of a slide in the hash rate caused by small and marginal miners shutting down operations during sustained market sell-offs and dwindling mining profitability. 

What’s more, while shutting down operations miners often sell their coins at market price in order to recoup mining losses, accentuating the sell-off. Only when the supply from these miners is absorbed do selling pressures weaken and the cryptocurrency finds a bottom. 

Meanwhile, remaining miners tend to hold their coins and sell later for profit when prices increase, further decreasing supply in the short term and driving the cryptocurrency higher, Alex Benfield, data analyst at Digital Assets Data told CoinDesk. 

Also, mining difficulty decreases happen a few months before reward halvings – a process aimed at curbing inflation by cutting rewards per block mined in half every four years. 

“Reward halvings increase the scarcity of bitcoin,” said Banfield.

So, miners who sustained the bear market likely anticipated a price rise on reward halving and held their coins, creating a supply shortage in the short term and driving prices higher. 

History repeating itself

Bitcoin’s 17.48 percent drop in November was caused by miner capitulation, according to market analyst Willy Woo. 

The argument may have merit because bitcoin fell from $13,800 to $7,500 in three months to September. Such a price drop may have hurt weak miners, forcing capitulation. 

Interestingly, selling pressures has also ebbed in the last four weeks. 

Also, the latest downward adjustment in the difficulty happened five months ahead of the reward halving. Therefore, big miners could create a supply shortage in the short term, lifting prices higher. 

All in all, there is a strong reason to believe bitcoin bottomed out in December with the downward adjustment in difficulty and could regain poise over the coming months. 

Even so, investors need to observe caution, as noted by Gabor Gurbacs, digital asset strategist and director at VanEck/MVIS. After all, there are additional factors like tax cycles, regulatory actions, cyber security events and derivative expirations that could influence prices significantly.

Disclosure Read More

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.



Credit: Source link

Tags: Crypto Techdata analystdigital asset strategist and director at VanEck/MVISDigital Currency Groupmedia outletmonthly mining difficulty decrease
Share76Tweet48
Previous Post

LedgerX Board Member Says Company in Disarray After Founders‘ Ouster

Next Post

MARKETS DAILY: Basketball’s First Celebrity Token Shoots for Monday Launch

coinnewsdaily

coinnewsdaily

CoinNewsDaily.com is an online Crypto Coin News Website that aims to provide latest trendy news from market and around the world.

Related Posts

Bankman-Fried faces down roomful of futures industry insiders at CFTC roundtable
Tech

Bankman-Fried faces down roomful of futures industry insiders at CFTC roundtable

Mai 25, 2022
Central African Republic to launch official crypto hub ‘Sango’
Tech

Central African Republic to launch official crypto hub ‘Sango’

Mai 24, 2022
South Korean police request exchanges freeze LFG related funds
Tech

South Korean police request exchanges freeze LFG related funds

Mai 24, 2022
Bitcoin stands apart from other crypto, and what that means for US public policy
Tech

Bitcoin stands apart from other crypto, and what that means for US public policy

Mai 22, 2022
Needed: A massive education project to fight hacks and scams
Tech

Needed: A massive education project to fight hacks and scams

Mai 21, 2022
Commonwealth Bank puts crypto trading trial on ice as regulators dither
Tech

Commonwealth Bank puts crypto trading trial on ice as regulators dither

Mai 20, 2022
Load More
Next Post
MARKETS DAILY: Basketball’s First Celebrity Token Shoots for Monday Launch

MARKETS DAILY: Basketball's First Celebrity Token Shoots for Monday Launch

Kategorien

  • Alt Coin
  • Bitcoin
  • Business
  • Ethereum
  • ICO
  • Litecoin
  • Mining
  • NFT
  • Ripple
  • Tech
  • Trading

What New here?

  • 6 Questions for Rene Reinsberg of Celo – Cointelegraph Magazine
  • Judge denies SEC motion to keep Hinman docs secret in Ripple case
  • The ultimate guide to Miami – Cointelegraph Magazine
  • About Us
  • Contact Us
  • Privacy & Policy

© 2018-2021 CoinNewsDaily.com by CoinNewsDaily Inc. Crafted with Love by iFtiDev

Please enter CoinMarketCap Free Api Key to get this plugin works.
✕
No Result
View All Result
  • Home
  • Coin Market Cap
  • Bitcoin
  • Ethereum
  • Ripple
  • Litecoin
  • Alt Coin
  • Business
  • Trading
  • Mining

© 2018-2021 CoinNewsDaily.com by CoinNewsDaily Inc. Crafted with Love by iFtiDev