- A recent rise in hash rates points to rising bullishness.
- Retailers and institutions are showing confidence in BTC.
Bitcoin’s resilience to remain above $30,000 continued as it rose by 0.37% or $116 in 24 hours to trade at $31 505 at 1245 GMT on Saturday. Nonetheless, the cryptocurrency was still 7% lower than its position a week earlier. However, the market fundamentals remain supportive of gains in the coming days.
Rising hash rates signaling bullishness towards the crypto-market
In a development that signifies a potential return to the cryptocurrency hyperactivity, there has been a significant spike in the hash rates of Bitcoin and Ethereum networks. The current market underperformance began around the same time China embarked on a massive crackdown against Bitcoin mining in the country.
For perspective, leading cryptocurrency exchange platforms Coinbase, Bitstamp, Binance, and Kraken experienced a combined decline in trading volume of about 40 percent in June, while there was a similar reduction in Hashrates. During that period, Bitcoin has also lost about 50% of its value from the ATH of $64,000.
As China cracked down on the country’s mining rigs, many miners seem to have crafted a way out of the conundrum, and they have since settled in more accommodating countries. They seem to have taken some time to set up the infrastructure, and now their return to productivity is reflected in the spike in hash rates. Importantly, this is seen as a bullish development for the price trajectories of Bitcoin and Ether.
A rise in hash rates has traditionally been accompanied by a corresponding rise in price. This is based on the logic that bullish prices incentivize miners to spend more on increasing their computational power to increase profit margins. Low hash rates are more vulnerable to 51% attacks and are associated with low prices.
The latest data shows that there has been an 11% rise in the hash rates of Ethereum, with Bitcoin nearing 100 E. While this is still some way off Bitcoin’s peak of 168k PH/s when BTC was above $60,000, it renews hope of a looming return to stable price gains.
The institutional perspective of Bitcoin remains positive
The stability shown by retail investors is also significant proof of the market’s bullishness towards Bitcoin despite its volatility. In addition, whale investors have also held on to their BTC, with more institutions likely to have adopted a wait-and-see approach but bullish nonetheless.
In the latest significant development, Twitter CEO Jack Dorsey last week announced his intention to venture into cryptocurrency payments through the financial services company he heads, Square. Through a product known as TBD, the company will develop a Bitcoin-based DeFi platform.
Dorsey revealed that the platform would be non-custodial and permissionless. However, much about TBD is still unknown, except for the fact that it will probably result in Bitcoin increasing its stake in DeFi. That perhaps explains why the news didn’t affect Bitcoin’s price. Square seems bullish about BTC even in the middle of a market storm, and it announced that it would be channeling $5 million towards a Bitcoin mining facility to be powered by solar energy.
Elsewhere, PayPal has in the past week raised its weekly minimum threshold for cryptocurrencies from $20k to $100 k. This is likely to allow more purchases of the digital assets, bearing in mind the great success that followed the company’s initial adoption of cryptocurrencies.
BTC’s price is currently at $31,504. The daily RSI is at 39, showing a mostly neutral momentum. If the momentum weakens, the bears could pull the price down to the first support level at $30,299, and further strong action could see the price slide below $30,000.
However, if the bulls take charge, they are likely to push the price to the first resistance level at $ 34,660, and further action may take it to the second resistance at $36,007.