In today’s on-chain analysis, Bitcoin Magazine will look at some of the fundamental indicators that highlight the strength of the Bitcoin network, including hash rate and difficulty band.
In addition, the analysis also shows that Bitcoin’s total on-chain transfer volume has hit a 5-year high. In the current bullish landscape, this suggests that BTC is headed for a new all-time high.
Bitcoin continues its upward trend
Over the past two months, Bitcoin (BTC) has consolidated in a range of $ 40,596 to $ 52,708. Additionally, these zones are near the 0.382 and 0.618 Fib retracement levels of the entire downward move from the ATH at $ 64.895 hit on April 14, 2021 (yellow line).
Bitcoin broke out of a consolidation range on October 6 and is currently trading at around $ 55,000. As such, a break above the September 6th high at $ 52.810 is an important bullish signal and could lead to new ATH levels. Currently, BTC is around 20% below that target.
BTC / USDT daily chart | Source: TradingView
The outbreak was aided by a surge in technical indicators. However, it is worth noting that the continuation of the uptrend occurs with gradually decreasing volume (blue line). This means that we can expect a big move in BTC in the next few weeks or months.
Hash rate up again
The hash rate of the Bitcoin network is one of its basic parameters. This is not only a measure of the speed and performance of the network, but also of the security of the network. The hash rate estimates the average number of hashes per second that all BTC miners generate.
We have seen the hash rate increase in value since the beginning of the Bitcoin network, but it also adjusts from time to time. These movements almost always correlate with BTC corrections.
The biggest drop in hash rate was seen between April and June 2021, when ATH’s bitcoin price fell to a local low of $ 30,000. On June 27, the hash rate was 61 million Th / s – the lowest since mid-2019 (red circle). A major contributor to this decline was the FUD surrounding China’s BTC mining ban.
Bitcoin hash rate | The source: Glass knot
However, the BTC network has once again proven its strength and the hash rate has risen higher since then. In the last few days, its value has returned to the highs of late 2020 and early 2021 (green rectangle). On October 2nd it reached a value of 180 million Th / s, almost three times higher than the June low.
Analyst @caprioleio has comment about this quick recovery as follows:
“A year ago, 60% of the network was in China. In May, the arms and legs of the Bitcoin network were amputated. However, they grow back completely after only 6 months. “
“’Great Migration’ in Mining Difficulties
The difficulty band is an indicator that produces a moving average band (MA) of bitcoin mining difficulty. Its compression has been a good signal to buy bitcoin in the past.
Amid the recovery in hash rate, on-chain analyst @Negentropic_ tweeted a chart of the difficulty band. He claims that the indicator “will soon signal a positive recovery as more miners are back in action”. He calls this process “the great migration”.
Bitcoins difficulty tape | The source: Twitter
In addition, the analyst adds that the sharp drop in the difficulty band and hash rate of the Bitcoin network can be compared to a similar event during the 2018 bear market. Strong started after a positive signal from the difficulty band indicator. In late June 2019, BTC hit a high of $ 14,000.
Total Bitcoin transfer volume in the chain
Another indicator looks interesting from the perspective of the Bitcoin price spike and hash rate of the network. It is the total transfer volume recorded by on-chain data. The indicator counts the total number of coins successfully transferred on the network.
Since mid-September, the indicator has recorded a 5-year high (green zone) and the average amount of BTC transferred is more than twice as high as in the best periods of the previous cycle.
Total transfer volume | The source: Glass knot
In addition, this happens with the decreasing trading volume on the exchanges, as mentioned in the first section. On-Chain-Analyst @mskvsk has speak on this in a recent tweet that:
“A record number of bitcoins have been moved in the past 2 weeks. Something is heating up. Bitcoin could reach a new ATH sooner than we think. “
You can see the Bitcoin price here.
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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
According to Beincrypto