On Saturday, Bitcoin decisively dipped under $9,000, reaching lows not seen in over a week. It was a move that liquidated dozens of millions of dollars worth of longs, shaking bulls from their expectations of upside.
Yet many analysts remain fundamentally optimistic, citing a number of trends indicating that Bitcoin still has a bullish undertone. Some of these trends are as follows.
#1: Miners Continue to Push the Hash Rate Higher
Bitcoin’s hash rate took a dip after the block reward halving in May.
The halving basically resulted in a 50% decrease in the revenue of miners. Hence, many miners on the margin were forced out of business.
Finance podcaster Preston Pysh wrote in the wake of the event:
“During the 2016 halving, the price went sideways for 9 days and then had a 28% drop, and it took 100 days to get back to the halving price. Mentally prepare yourself for the efficiency cleansing and difficulty adjustment as the protocol prepares all passengers for launch.”
Yet due to what seems to be the summer rainy season in China and new mining hardware, miners have managed to recover rapidly. CoinMetrics reported earlier this month that the hash rate of the Bitcoin network is now back to pre-halving levels.
This has resulted in the Hash Ribbons, an indicator that derives signals from the moving averages of the hash rate, from printing a positive signal. Charles Edwards, a digital asset manager, wrote on the hash rate-based indicator:
“Hash Rate “Recovery” looks like it may occur next weekend… The Hash Ribbon “Buy” signal also requires price momentum to improve from here, so could take a bit longer than a week.”
The Hash Ribbons are important as they have historically flipped bullish prior to bull rallies.
Hash Ribbons Buy confirmed.
This is just the 10th time these conditions have been met for #Bitcoin.
It is highly likely we never see $BTC under $6000 ever again.
All other occasions saw an average gain-to-cycle-peak of +5000%.
Now is the period to Buy Bitcoin and never sell. pic.twitter.com/hSH9BtRhsj
— Charles Edwards (@caprioleio) December 28, 2019
#2: Bitcoin HODLers Are More Bullish Than Ever
Data shows that Bitcoin “HODLers” — a class of BTC investors focused on long-term holding — are more bullish than ever.
Glassnode’s Rafael Schultze-Kraft shared a multi-part thread on the subject matter. This was done in an attempt to accentuate why on-chain data shows Bitcoin is “long-term extremely bullish.” The basic premise of the thread is the more Bitcoin HODLers hold, the less potential selling pressure there will be.
1/ A thread showing 12 charts that illustrate #Bitcoin investor confidence and increased HODLing behavior.
Spoiler: This is long-term extremely bullish.
(data @glassnode)
Let's dig in 👇
— Rafael Schultze-Kraft (@n3ocortex) June 26, 2020
Some of his points, which were each backed by on-chain data and charts, are as follows:
- 61% of all BTC in circulation has not moved in over a year.
- “The average Coin Days Destroyed (= transacted #bitcoin volume times number of days since coins were last moved) per year has been decreasing and is at its lowest level since 2016.” This suggests the existence of more long-term holders.
- The amount of BTC held by exchange wallets has dropped dramatically over the past few years.
- Addresses deemed HODLers are adding to their positions, not selling.
#3: The U.S. Dollar Will Devalue, Analyst Says
Bitcoin could benefit if the U.S. dollar devalues against asset classes and other foreign currencies. That’s according to Rob Koyfman, CEO of Koyfin and a former Goldman Sachs vice president, anyway. He wrote in a recent article:
“The Fed’s commitment to prolonged use of QE may represent a major turning point for the US Dollar. A break below [a close-by level] would confirm a major decline for the USD with implications across asset classes… USD weakness may be a catalyst for Bitcoin breaking out to new highs.””
Featured Image from Shutterstock Price tags: xbtusd, btcusd, btcusdt 4 Fundamental Reasons Why Bitcoin Is Bullish After Drop Under $9k
