It’s a disappointing time for Bitcoin after the cryptocurrency has fallen almost 25% from within two weeks, and more than cut itself in half since Thanksgiving!
Yuval Gov at Cryptopotato, who is used to following every BTC fluctuation, is patting himself on the back from noticing some of the signs of a weak rally yesterday when a colossal bitcoin candle spiked up to around $3770.
The argument advanced by Gov and other experts was that weak volume was an indicator that the rally wasn’t going to last – and they were right.
Following that small spike, the bottom fell out as Bitcoin sank quickly from $3770 to land at around $3570.
“Bitcoin went back to its weekly low and in just under 120 minutes returned all the past week’s gains,” Gov wrote. “During the past week, we’ve talked about the no-volume BTC market which has marked its range between $3500 to $3700. We’ve said that the higher chances are to break down from that range, rather than to break up. Unfortunate to (sic) the bulls, we’re getting very close to that point.”
Mandy Williams, in yesterday’s coverage, added this:
“The decline isn’t strange as it is typical to see a drop in the crypto markets during weekends whereas there is a low trading volume which is easier to manipulate.”
However, Toju Ometoruwa, another top writer on the CP team, has been looking at hash rate as an indicator of overall health.
Citing a 36% drop in hash rate from October to the end of 2018, Ometoruwa notes that BTC has already experienced a 10% increase in hash rate this month.
“Hash rate is an interesting topic to analyze when trying to gauge the overall health of the crypto markets beyond prices,” Ometoruwa writes. “The hash rate is merely the total amount of hash being calculated each second in the bitcoin network. …Determining the correlation between BTC price and hash rate can be tricky. However, what many in the space have come to observe is that the hash rate is directly correlated with the Bitcoin network difficulty, which increases as more miners enter the network. …
So if hash rate increases when mining becomes more difficult, we can assume that a lower hash rate is caused by fewer miners entering the network and therefore lower difficulty. A declining hash rate also means there is less profitability in mining, which leads to miners shutting down their mines or moving to mine other coins.”
Is the hash rate indeed showing that miners are still on board and ready to take Bitcoin higher? Or is there a further correction to value before we get started? Keep an eye out this week.