The Bitcoin price index is at crossroads once again and may look to define its short-term behaviour now according to recent movements. The biggest cryptocurrency in the world by market capitalization is giving mixed signals right now due to decrease in mining difficulty that has often had positive correlation with price and relative price stability.
Bitcoin has never been a conventional asset by any means but the latest trend regarding the mining difficulty and relative price stability is an interesting new development that may define the next conventions for a short time at least. The main aspect of the new outlook is the impact on the mining difficulty after the 2020 halving.
When the halving occurred back in May 12, 2020 and much of the anticipation was around the price dynamics, the mining difficulty was another important variable that was being eagerly followed. It was a sensible prediction back then that after the halving most of the inefficient miners will be out of the game in the immediate aftermath and as a result, the mining difficulty will take a hit, thus affecting the price according to established conventions.
But, the same has not actually happened. Despite sustained decline in mining power, the price index has not yet faltered a lot, mostly remaining within the $9400-$9900 narrow trading range with occasional dips and upticks that are not sustained. Recently, the price suffered an outright rejection at $10400 and immediately retracted to $9000 in a matter of minutes.
For almost a month, the mining difficulty has posted negative figures and still, the price index hasn’t changed a lot and this behaviour hasn’t been witnessed before except back in 2018 when the price bottomed at around $3000 and paved the way for a future bull run to around $14000 in a few months time.
So, these mixed signals are a part of the new arrangement of the cryptocurrency in which decreased supply is keeping sellers on their toes and increasing HODLing while at the same time, the mining power and difficulty is reducing slightly. However, this trend is expected not to last forever as the advent of more efficient miners may change the mining game altogether and a robust bull run is also expected after the halving had its course on demand and supply of the cryptocurrency. However, in the short-term, the price index is at crossroads and may get bullish to $13k easily or retrace back to $7k.
Image source: pixabay.com
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