By
Bena Ilyas
April 18th, 2024
Some analysts are highlighting the current hash rate, which is a measure of computational power used to mine bitcoin, as a major indicator for an imminent price surge.
Bitcoin price has received a battering this year, along with the whole crypto market. The biggest cryptocurrency on the market has shed over 60% of its value since its all-time high of almost $69,000 in November last year.
Bitcoin investors have been caught in a dilemma this year as the price of the coin continues to experience wild price swings. The crypto market has seen almost $2 trillion of its value go up in flames, which was sparked by the sudden collapse of the TerraUSD stablecoin which saw its sister token Luna lose all of its value.
The bear trend continued, which was led by Bitcoin, tagging other coins including ETH, Bitcoin Cash, Solana, Cardano, XRP, BNB Coin and a lot more, alongside for the ride.
Analysts, however, are predicting a big break for the Bitcoin price if recent technical signals are to be believed.
Some analysts are highlighting the current hash rate, which is a measure of computational power used to mine bitcoin, as a major indicator for an imminent price surge.
Many bitcoin miners, during a bear run in the market, are put off by the depressed price of bitcoin and as such deemed it unprofitable to continue mining.
The 30-day average hash rate (a monthly average value) has decreased more than 7% since mid-May when the market really started to decline, and at one point, plummeted by 10%.
Charles Edwards, the founder of quantitative crypto fund Capriole Investments, who coined the term “hash ribbons” in 2019 to identify buying opportunities for bitcoin, stated that as more miners are taken out of the market, the difficulty of mining bitcoin reduces because there is less competition.
The reduction in competition gives way for more miners to re-enter the market which might lead to recovery.
According to Edwards’ method, the worst of the miner capitulation typically ends when the 30-day moving average for hash rate crosses back above the 60-day moving average.
Edwards however added that, when this happens along with the 10-day moving average price of bitcoin going above the 20-day moving average price, the bitcoin price will see flashes of a “buy signal.”
Head of research at CoinShares, James Butterfill has also stated that “Bitcoin prices have fallen by 74% peak to trough at one point, this closely matches the 83% decline seen in 2018 and must be taken in the context that the market is significantly bigger and has a much broader investor base now than it had back in 2018.”
According to Yuya Hasegawa, a crypto market analyst at the Japanese crypto exchange Bitbank, the biggest obstacle the crypto market is facing at the moment is the uncertainty surrounding the Fed’s monetary policy and if the central bank will decrease the pace of interest rate increases.
He added that any slowdown in the pace of rate hikes could be positive for the resurgence of the crypto market.