The price of bitcoin has been battered this year, as has the entire crypto market. The market’s largest crypto-currency has lost more than 60 percent of its value since its all-time high of nearly $69,000 last November.
Bitcoin investors have been caught in a dilemma this year, as the coin’s price continues to see significant price swings. The crypto-currency market has seen nearly $2 trillion of its value go up in smoke, which was triggered by the sudden collapse of stablecoin TerraUSD that saw its sister token Luna lose all of its value.
The downward trend, led by bitcoin, continued, dragging other currencies like ETH, bitcoin cash, Solana, Cardano, XRP, BNB Coin and many others in its wake.
However, analysts are predicting a big breakout for the bitcoin price if recent technical signals are to be believed.
Some analysts point to the current hash rate, which is a measure of the computing power used to mine bitcoins, as a major indicator of an impending price hike.
Many bitcoin miners, during a period of market decline, were discouraged by the low price of bitcoin and deemed it uneconomical to continue mining.
The 30-day average hash rate (a monthly average value) has fallen by more than 7% since mid-May, when the market really started to decline, and at one point even fell by 10%.
Charles Edwards, the founder of quantitative crypto fund Capriole Investments, who coined the term “hash tapes” in 2019 to identify opportunities to buy bitcoin, said that as more miners are removed from the market, the difficulty of mining bitcoin decreases because there is less competition.
The reduction in competition leaves room for more miners to re-enter the market, which could lead to a recovery.
According to Edwards’ method, the worst of the miner capitulation usually ends when the 30-day moving average of the hash rate moves back above the 60-day moving average.
Edwards added, however, that when this occurs at the same time as the 10-day moving average price of bitcoin moves above the 20-day moving average price, the bitcoin price will see flashes of a “buy signal.“
Head of research at CoinShares, James Butterfill also stated that “bitcoin prices fell 74% from peak to trough at one point, this closely matches the 83% decline seen in 2018 and should be taken in the context that the market is considerably larger and has a much broader investor base now than it had in 2018.“
According to Yuya Hasegawa, a crypto-currency market analyst at Japanese crypto-currency exchange Bitbank, the biggest hurdle facing the crypto-currency market right now is the uncertainty surrounding the Fed’s monetary policy and whether the central bank will decrease the pace of interest rate hikes.
He added that any slowdown in the pace of rate hikes could be positive for the resurgence of the crypto market.