Over the past few weeks, the price of Bitcoin has not gone beyond a narrow horizontal range, that is, it has changed within a strictly limited framework. However, according to certain metrics in the cryptocurrency blockchain, this could be the so-called calm before the storm .
Experts of the analytical platform Glassnode are confident that in the near future there will be a sharp price spike on the BTC chart. Let’s try to figure out why one should prepare for the growth of Bitcoin, taking into account the arguments of analysts.
Note that the current market situation seems to be mixed. All top ten cryptocurrencies by market cap have dropped in the last week, excluding stablecoins. At the same time, the indicators of drawdown are different: if Bitcoin fell in price by 3.8 percent in seven days, then Polkadot DOT sank by almost 20 percent.
At the same time, Bitcoin really seems to be boring: in recent days, the cryptocurrency has been moving in the range from 35 to 31 thousand dollars and remains quite stable. At least the coin no longer collapses almost twice during the week, as it was in May.
However, this will not last long. According to experts, there are already reasons to change the trend.
What will happen to cryptocurrencies in the future
Glassnode pointed to signs of hashrate recovery – that is, the total processing power of the Bitcoin network – after the migration of Chinese miners due to constant pressure from the government. The researchers noted that the speed at which network computing power is returning could determine whether the overall market sentiment is bearish or bullish.
The logic is simple: if miners expect the market to grow in the near future, they will participate in bitcoin mining and look for countries to transport their equipment. Recall that the situation with the attitude of the Chinese government towards cryptocurrency mining is not getting any better. In particular, yesterday it became known about the ban on the mining of coins in Anhui – already the sixth province of the country, in which the local government has banned the mining of bitcoins. The main reason for such a decision in this case was allegedly problems with the supply of electricity.
Against the backdrop of restrictions by the Chinese authorities, the recent hash rate crash was the largest in the history of Bitcoin: in a very short time, the indicator fell by more than half. However, a few weeks after the fall, part of the «lost» hash rate returned to the network, that is, Chinese miners are gradually connecting their equipment back.
If this process speeds up, the chances of BTC growth will increase, since in this case miners will no longer need to sell their coin reserves and create pressure on the market to cope with financial difficulties. And the miners usually have enough cryptocurrencies.
At the same time, as the head of the Phoenix Store, a sales partner of the manufacturer Bitmain, noted, half of the Chinese ASIC miners will never return to online. Still, some of the equipment for mining bitcoins is already outdated and «worked for many, many years.» Accordingly, it is unlikely that anyone will decide to transport such devices to other countries, therefore, it is worth hoping for a full restoration of the Bitcoin hash rate to its former maximums, perhaps thanks to new equipment.
Another indicator of market sentiment is the trend towards withdrawal of bitcoins from exchanges, which persists throughout the entire bullish trend. Back in April, when Bitcoin was trading at nearly $ 60,000 , we saw “an inexorable depletion of cryptocurrency reserves,” many of which were channeled to the Grayscale Bitcoin Trust or accumulated by large investors.
However, after the price of BTC fell by about 50 percent over the past couple of months, users began to massively return their bitcoins back to trading platforms, probably to sell them amid the fall – or at least prepare for it. Now this local trend has changed again, notes Glassnode. Here is an expert quote from Decrypt.
During May, a large flow of BTC was deposited on exchanges, and the market dipped by about 50 percent. Now bitcoins are being withdrawn from trading platforms again at an average rate of 2,000 BTC per day.
Finally, the last important sign of the market is that the activity in trading crypto derivatives continues to decline. After a series of mass liquidations of traders’ positions that accompanied the fall of the crypto market a couple of months ago, «the appetite for speculation on borrowed funds has significantly decreased . » This significantly reduces the dependence of the BTC price on the aggressiveness of traders and abrupt changes in transactions with financial derivatives.
Simply put, the direction of Bitcoin’s next big move is likely to be driven by underlying supply and demand, rather than «speculative premiums and discounts.» In general, such a brutal May correction really has some positive consequences for the crypto market: it has gone through a serious test, cleared of «weak hands» and is ready to go up.
We believe the cryptocurrency market really needs time to recover from a series of crashes in May. And although the sharp drawdowns seem to be over now, investors will also need several weeks before they become convinced of the niche’s ability to resume growth and open new positions. In this case, it will be possible to talk about a new stage of niche jumping and even remember different forecasts for coin rates from experts.