Bitcoin rose sharply to $ 13,000 in the fourth quarter. At the start of the quarter, Bitcoin (BTC) was in the region under $ 11,000, then a steady rise pushed the price to $ 13,000 on October 21 for the first time this year.
The price rose to $ 13,217, a record high for 2020, before declining to around $ 12,750. This upward movement in price is definitely a sign of investor optimism in the current market.
Hasherat growth is a bullish sign?
Bitcoin’s hash rate has also increased continuously since the end of the second quarter, peaking at its highest level of 157 spills per second on October 17, according to BitInfoCharts. The metric measures the number of hashes per second that the Bitcoin network has made in the last 24 hours. This means the speed at which the miner reaches a certain hash, that is, the number of hash calculations per second.
Thus, the more BTC is extracted, the greater the hash rate. Jay Howe, CEO of OKEx, a Malta-based cryptocurrency exchange, told Cointelegraph that the increased hash rate is good news for the network:
“This indicates that miners are confident in the future direction of Bitcoin prices and increase the amount of resources. They are often good at predicting the price of BTC, although the price increases do not always follow an increase in the hash code. There is no steady relationship between them. Prices, especially if more miners do not sell their new coins, but we are not so sure.
However, the increased hash rate also means that miners will also need computing power to be able to take advantage of the increased competition on the network. Howe detailed these nuances, noting that there is likely to be more competition in the long run and that those with more resources will be more successful: the higher the costs, the higher the miner costs. ”
Financial Summit organizer Ton Weiss discovered what this could mean for Bitcoin miners, including their comparison to miners on the Ethereum network:
“An increase in hash rate during consolidation or slow price evolution is always a positive for further upside potential. When the price rises, miners who invest in well-managed farms will make good profits. Bitcoin mining will always be more profitable than mining Ethereum in the long run. For the obvious reason that Ethereum’s Level C management aims to eliminate mining in favor of a proof-of-effort.
Bitcoin distribution analysis reveals patterns
As Bitcoin is becoming less popular every day, with only a limited number of coins to be redeemed, it is also important to consider the role of distribution trends among BTC holders from a market perspective. According to data from the Blockchain Center, cryptocurrency exchanges currently account for 12.62% of the total BTC distribution, and this number is declining.
The two main reasons for this could be that new bitcoin holders are buying bitcoins in the secondary market and storing them in cold wallets as a store of value, similar to the way traditional investors deal with gold, and the DeFi barrier, which may force some investors to tokens. Bitcoin to make quick profits in the DeFi markets rather than owning it. As this trend increases the cost of trading Bitcoins, the price of Bitcoins is likely to rise as the volume of exchanges in the token pool decrease.
Another significant number is the amount of bitcoins that institutional investors and whales own, which is 3.74% and is gradually increasing. These large institutional investors are increasing the share of Bitcoin in their portfolios because they see it as a store of value and hedge against the uncertainty in the traditional market. Hao also stated that “with fewer bitcoins remaining and usage increasing, the bitcoin price dynamics certainly appear optimistic”.
According to IntoTheBlock’s market sentiment data, which analyzes chain data, exchange signals and information about derivatives, the market is currently “mostly bearish”, even though Bitcoin has reached $ 12,900. Indicators of large transactions and network growth indicate that the market is slightly bearish as it is declining for the above reasons. As cryptocurrency analyst Skew notes, the bitcoin options markets also indicate the “volatility of growth” of their underlying assets.
Macroeconomic indicators that make markets optimistic
The current macroeconomic scenario is very positive, with US presidential candidate Joe Biden up front and new stimulus test talks underway. In fact, it was the fastest economic recovery for the United States in history to date.