Walletreum
Bitcoin

Bitcoin’s Bull Case Grows as Hash Rate Surges to Fresh High

There are signs that the fundamental and technical bull case for the leading cryptocurrency is growing once again.
Pinterest LinkedIn Tumblr

The past few weeks have undoubtedly been weak for the cryptocurrency market; the price of BTC has collapsed from the $10,500 high to a price as low as $8,400 established just this weekend, while the hash rate of Bitcoin has stagnated, seemingly due to the coronavirus outbreak in China resulting in the shutdown of some mining farms.

But, after the brief lull, there are signs that the fundamental and technical bull case for the leading cryptocurrency is growing once again.

Bitcoin Is Now More Secure Than Ever Before

According to the latest data from Blockchain.com, the crypto market crisis unfolding over the past two weeks has done little to worry miners.

Case in point: the hash rate of the Bitcoin network — which is a measure of the amount of computing power securing the blockchain — has reached a new all-time high of 136 exahashes per second. This metric is nearly three times higher than it was one year ago,

Commenting on the significance of this, crypto price tracking app Blockfolio wrote:

As Wall Street experiences the worst week since the 2008 financial crisis, Bitcoin’s hash rate has just reached a new all-time high. 136,264,908 tera hashes per second.

While it’s hard to analyze why this surge occurred, it lines up with two events:

  1. China’s factories, per the S&P 500’s Global Market Intelligence team, are starting to slowly reopen, which likely means that Bitcoin farms forcefully shut down by Chinese authorities are starting to reopen as well.
  2. Layer1, a San Francisco-based company that is a part of the portfolio crypto conglomerate Digital Currency Group, last month launched its mining operation in Texas, purportedly activating several containers that have a 2.5-megawatt capacity each. Layer1 intends to control 30% of all of Bitcoin’s hash rate through the Texas site and others they have control over by the end of 2021.

The seeming resumption of the never-ending Bitcoin hash rate uptrend comes ahead of the rapidly-approaching block reward halving in May 2020, during which the amount of BTC issued per block will get cut in half.

Analysts say that this decrease in the inflation of Bitcoin, which will bring inflation lower than the ~2% of fiat monies around the world, will give the cryptocurrency fuel to surge to new all-time highs past $20,000 in the coming years.

Technical Strength Building

In addition to the positive fundamental strength, technical analysts have begun to argue that BTC’s charts show the cryptocurrency is currently coiling to embark on its next leg higher.

LightCrypto, a pseudonymous analyst, explained in a thread published Friday that he thinks there’s a good chance BTC is bottoming from a technical analysis and chart standpoint.

Backing this optimism, he cited Bitcoin’s relatively strong performance as global markets have underperformed:

Gold is down the most since 2013, possibly sold to cover margin calls – this is a further sign of an emotional and capitulatory macro environment. In all of this, Bitcoin has held, losing less on the day than gold.

He added that with the number of short positions building and there existing strong support at $8,500, we’re open to “the opportunity of a surprisingly large move upwards,” referencing the potential for a short position squeeze. Should this take place, Bitcoin should rapidly move above $9,000.

Also, Su Zhu, a crypto-centric hedge fund manager who called Bitcoin’s January recovery weeks in advance, said that he sees signs that Ethereum is entering a “buy zone,” meaning a potential bottom:

DAI/USDC at the highs of the year now, a good barometer of risk aversion. DAI trades above peg whenever there’s large liquidations on ETH/DAI, demand for DAI. It will result in the SF going lower on MKR and represents a flushout of leveraged longs.



Avatar
Author

I am a writer who has been following the cryptocurrency space since 2013. My insights and interviews have been featured in leading publications in the industry such as LongHash, NewsBTC, and Decrypt. When I am not writing, I work as a team member of the EXODUS division of HTC, a Taiwanese electronics company. I own a small amount of Bitcoin. Contact NickC@blockonomi.com

Write A Comment

Blockfi
As Featured In
As Featured In