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Despite Market Carnage, This Key Metric Shows Bitcoin Remains Bullish

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Bitcoin hasn’t done too hot over the past day. The cryptocurrency, after trending higher and higher throughout all of last week, crashed as low as $8,150 on Sunday, plunging from the $9,200 price point established just 24 hours prior to the low. This strong crash, which comes as bulls were starting to re-enter the market, has obviously scared investors across the board. Some, in fact, have suggested that the crypto market is well on its way to once again entering a bear phase. But, one key Bitcoin metric has continued to trend higher and higher, suggesting that this nascent market remains in a bull trend. Bitcoin Difficulty Remains In An Uptrend In spite of the recent weakness in the cryptocurrency market, the difficulty of the Bitcoin network — how hard it is for miners to solve blocks — is about to see a gain of 7% when the algorithmic adjustment takes place tomorrow. PlanB, the pseudonymous analyst behind the famed stock-to-flow model, recently shared this bullish statistic (currently an estimate, though its unlikely to be wrong), writing that there is “no sign of weakness two months before the halving.” Tomorrow's #bitcoin difficulty adjustment (which keeps time between blocks at 10 minutes, regardless of hashrate) will be a massive +7%! No sign of weakness 2 months before the halving. 🔥 https://t.co/zMdxlteR6Z pic.twitter.com/xtRYcQJgoD — PlanB (@100trillionUSD) March 8, 2020 This optimistic statistic shortly after the hash rate of the Bitcoin network — the amount of computational power being allocated to processing blocks — hit a new all-time high of 136 exahashes per second, per data from Blockchain.com. Why This Is Bullish for BTC So why is this bullish for BTC? Well, the growth in hash rate (which leads to growth in the network difficulty) suggests at least two things: 1) Bitcoin miners are confident in the long-term success of the cryptocurrency (especially in terms of price) and allocate more resources to the security of the network; and 2) the technology of mining machines is being improved on, resulting in the increase in hash rate. Also, strength in the mining ecosystem has historically coincided with price action. Per previous reports from NewsBTC, digital asset manager Charles Edwards and the team at investment firm Capriole Investments found that BTC’s fair value can be equated by determining how many Joules are used to secure the network. Below is a chart illustrating this correlation, which sees Bitcoin’s market value and energy value trend towards each other, almost as if they were magnets. The rapidly-surging hash rate and difficulty, then, implies Bitcoin will soon start to trend higher once again. Featured Image from Shutterstock

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via https://www.ohnocrypto.com

Nick Chong, Khareem Sudlow