Bitcoin price has had a rather slow start to the week. The Monday charts are showing some deceptive sharp moves in both directions during Asian trading hours and morning Europe hours. However, the trading range is even narrower than the weekend’s. Only USD 150 (CoinDesk) separates the highs and lows in the past 24 hours so far.
Is Bitcoin really gaining some strength for a full-blown rally as we talked about in yesterday’s analysis? Or is this just further sideway impotence from Bitcoin buyers? And is this prior to the downward trends bears have been waiting for since August?
Bitcoin difficulty and security
We look at some of today’s fresh news for a clue or two on price sentiment. First, we arrive at one of the fundamental pieces to emerge on Monday. Data from BTC.com, one of the largest Bitcoin mining entities in the world, appears to show that computing power securing the Bitcoin network has hit yet another fresh high in 2019.
More interestingly, if the data is accurate, this would mean that some 600,000 new mining devices have come online since June 2019. If more than half of these specialized devices (ASICS) have really been switched on, then it means miners are seeing profitable numbers. And they are mining as much as they can while price maintains these levels near USD 10,000.
Using the hash rate averages over two weeks, on Friday, Bitcoin hash power crossed 85 exahashes per second (EH/s). This caused difficulty to adjust to 12 trillion — itself another new record for Bitcoin difficulty. This means that since mid-June, there has been a 60% jump in both computing power and difficulty level securing the Bitcoin network.
These powerful devices cannot do anything other than working to solve highly complex mathematical puzzles. These determine when and how Bitcoin blocks are “mined” (hence, the term miners) and are not cheap. Depending on their manufacturer and specifications, they can cost between USD 1,500 and USD 2,500 per unit. Essentially, 600,000 of them would have resulted in device makers earning over USD 1 billion in just three months.
Thanks partly to the good rains in southwest china giving abundance hydro power, miners have been keen to expand operations. And the demand for these specialized mining equipment is far outstripping supply, according to CoinDesk.
Bitcoin’s spiking hash rate and difficulty are in line with the soaring price since earlier this year. Thus, this has led to increasing demand for mining equipment that has significantly outstripped supply. It’s also in part thanks to the rainy summer season in southwestern China which resulted in cheap, abundant hydroelectric power.
In Russia’s freezing Siberia region, the Brastsk hydro power generating stations are in the spotlight. Underused since the glorious industrial age of the Soviet era, they now serve a purpose. Miners are not tapping into them to operate mining farms, thought to accounts for a tenth of total hash power on the Bitcoin network.
Typically, miners are the first to set sentiment for the masses, and if they are bullish about operations, it generally means good prices are here to stay.
Meanwhile, Bitcoin whales are also looking to be digging in trenches and waiting. That is, if we believe the statistics from crypto hedge fund manager Murad Mahmudov. Speaking at weekend event Baltic Honeybadger, a Bitcoin conference, Mahmudov said that his research had identified over 50 positive catalysts for the advancement of the world’s most recognized cryptocurrency. One of them, he believes, is that owners of significant amounts of Bitcoin aren’t letting go:
“We have noticed that large bitcoin holders aren’t selling or aren’t moving their coins in the last couple of months. Yes, price may go higher or lower, in the short term, but we remain very bullish in the medium term as well.”
Other catalysts included lower volatility, falling trust levels in states and banks, active banning of cash by states, rising global debt, and the increasing growing strength and development of the Bitcoin network and infrastructure. The most important, he feels, is active measures to restrict money and the dovish central bank policies that we have been talking about for days now on BitcoinNews.com. Mahmudov explains:
“The elimination of cash and, probably, a push for deeper and deeper negative rates are likely to be the two strongest forces [catalyzing Bitcoin growth] out of the 50 I mentioned.”
Bulls will still be waiting this week, we suspect, but altcoins like Ethereum and EOS are definitely enjoying their own days in the green. Today, ETH is priced above $190 and looking almost surely to breach $200 levels.
Sometimes, we just have to accept that alts always rely on Bitcoin fortunes. But there’s no harm in Bitcoin taking the cue from its cousins, is there?
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