These indicators fuel the course

Bitcoin has been unstoppable for a few days. Over the weekend, the cryptocurrency rose again sharply and is currently trading at just under 23,000 US dollars – the highest value in three months. At the same time, other Bitcoin indicators are running hot and are repositioning the crypto market after the long low phase.

Bitcoin Indicators: Hashrate and Difficulty

Defying crypto winter: The hash rate is rising and rising. According to Data from Glassnode the computing power in the Bitcoin network is at an all-time high with around 270 exahashes per second (EH/s). For comparison: a year ago today, the hash rate was almost 200 EH/s. Within twelve months, the accumulated computing power in the network has grown by 35 percent.

The growth in bitcoin computing power is consequently also reflected in the all-time high bitcoin difficulty. The difficulty adjusts every 2,016 blocks, almost every two weeks. With this, the network ensures that a new block is created every ten minutes.

In the last “Difficulty Adjustment” on January 15, it increased by 10.3 percent. At the next Difficulty Retargeting on January 29, the relative difficulty of finding a valid Bitcoin block will increase by just 0.5 percent grow.

Bitcoin: further recovery in sight?

The recent market rally surprised many investors, writes Glassnode in the current issue of the in-house newsletter. The increased prices in the crypto market are a temptation to pocket profits after the “extended bear market”.

Of course, one can only speculate about the short-term consequences for Bitcoin. The MVRV indicator could be an indicator of future growth. This was listed below the critical value of 1 for the first time in June 2022. Over 50 percent of all BTC investors were trading in the red at that time.

The indicator measures the ratio of the market capitalization to the so-called “Realized Value”, i.e. the actual value stored in Bitcoin. If the ratio of market capitalization to realized value is below 1, this indicates oversold – a trend reversal is more likely. Here’s an example.

More than six months in oversold territory is therefore a long ordeal, even for the notoriously volatile cryptocurrency. The recent price growth promises improvement. It remains to be seen whether the recovery will be sustainable in the long term.

Another positive indicator: declining US inflation. Although consumer prices have risen by 6.5 percent compared to the same period last year, the rate of inflation continues to weaken from month to month. If the macroeconomic situation stabilizes, this could have a positive impact on the crypto market. Bitcoin could continue to rise.