Bitcoin's price and hash rate have moved in opposite directions since July.
While prices peaked above $13,000 in July and have been in a downtrend ever since, the hash rate – the total computing power dedicated to securing the blockchain – nearly doubled from approximately 50 exahash per second (EH/s) to almost 90 EH/s, having peaked at more than 100 EH/s.
Typically, a sustained drop in prices reduces mining profitability, forcing small and medium-sized miners to shut down operations.
For instance, litecoin's price is down more than 55 percent from highs above $100 seen on Aug. 4 – the day when the per block reward was reduced by half to 12.5 LTC from 25 LTC. Meanwhile, its hash rate is languishing at yearly lows.
On the flip side, a big rally boosts mining profitability, attracting more mining power. As bitcoin's price rose from $4,000 to $13,880 in the four months to June, the hash rate rose from 39 EH/s to 73 EH/s.
Miners consider future price expectations while deciding whether to boost computing power or scale back operations. Hardware-related developments and electricity costs also play a role.
Miners have continued to add capacity since July, possibly due to expectations that prices will rise ahead of the next year's reward halving, as noted by @skewdotcom.
Also, some operations were running below capacity in May and June due to a delayed start of the rainy season in China’s southwest, where many miners are located to take advantage of cheap hydropower.
More recently, the newest generation of mining rigs such as Bitmain’s AntMiner S17 and MicroBT’s WhatsMiner M20S, hit the market and may have played a role in boosting the network hashpower. |
Bear Bias Strengthens
BTC: Price: $7,200 | Market cap: $131.42 billion | 24-Hr Volume: $17.33 billion
Short-term trend: Bearish Bitcoin has dived out of an ascending channel on the hourly chart, signaling an end of the minor bounce from two-week lows near $7,070 registered on Wednesday.
Further, the newly formed bearish outside bar candlestick pattern on the three-day chart is indicating a scope for a drop to recent lows near $6,500.
The short-term outlook would turn bullish only above $7,800. However, currently odds appear stacked against a strong move above that level.
Having said that, a minor move to $7,400 could be seen if the newfound hourly chart resistance at $7,250 is breached in the next few hours.
Long-term trend: Neutral
Bitcoin's monthly MACD histogram has dropped below zero, signaling a bearish reversal. The cryptocurrency is trapped in a five-month bearish channel.
Even so, the outlook remains neutral, as the MACD is a lagging indicator. Further, the miners’ reward halving, usually a price-bullish event, is due in May 2020.
With BTC looking oversold after a 50 percent drop from June highs above $13,800, a notable recovery ahead of the supply-cutting event can’t be ruled out – more so, as the 50-week MA has crossed above the 100-week MA, confirming the first golden bull cross since May 2016.
After all, the previous bull cross had marked the start of a long-term bull market. The cryptocurrency picked up a strong bid near $430 following the bull cross confirmation in May 2016 and charted its way a record high of around $20,000 in December 2017.
That said, the outlook as per the weekly chart would turn bullish only if and when prices break higher from the five-month long bearish channel.
Read Analysis
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Tezos Trundles On XTZ: Price: $1.74 | MCAP: $1.2 billion | 24-Hr Volume: $33.5 million
Short-term trend: Overbought XTZ has been the alt-coin to watch after Kraken launched support for staking via its exchange platform, which went live on Dec. 13.
Up 13.2 percent over a 24-hour period, it would appear that traders have been betting big on the announcement from Kraken, published Dec. 11.
Tezos is a multi-purpose blockchain which aims to combine a self-amending protocol and on-chain governance to manage future changes and implementations to the network.
XTZ's daily RSI is now hinting at buyer exhaustion with a pullback expected at around $1.66 (prior Dec. 9 peak high).
Long-term trend: Bullish
The long-term trend for the bulls remains in tact for the foreseeable future as it slips into 10th place in the market cap rankings while developments like the one stated above continue to expose the asset to new investors.
The awesome oscillator (AO), an indicator of trader momentum, shows a continuation in price is possible, once the cycle of a short-term sell-off has completed.
Closing below $1.39 aborts the long-term bullish view.
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| | | | Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments. |
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