Bitcoin (BTC)’s poor price performance has been highlighted widely recently, with many analysts arguing for further bearish momentum in the coming weeks.
Still, it wasn’t that long ago that many investors and crypto experts were raving about some notable fundamental metrics that were and remain quite bullish.
Let’s take a look at three Bitcoin metrics that bulls could keep an eye on.
Bitcoin’s hash rate is near a record high
Bitcoin’s hash rate, a metric that indicates the amount of computing power used to mine BTC, recently hit a record high, indicating the overall strength of the network and continued interest from miners. There has never been more security in Bitcoin and it highlights the fact that miners appear to have confidence in the future of the Bitcoin network.
BREAKING: #Bitcoin Hash Rate Reaches a New ATH! pic.twitter.com/kSD7LCCHkl
– Mister Crypto (@misterrcrypto) September 10, 2023
There is some controversy as to whether a high hash rate represents a bullish signal or not. Investors interpret the increased hashing power as a sign of an impending price rise, while others claim the opposite or claim that there is no connection at all.
Looking at data from the past year, there seems to be a clear connection between hash rate and price.
Bitcoin total hash rate vs market price (USD), 1-year chart. Source: Blockchain.com
This makes perfect sense considering that miners will eventually start mining more as prices rise. The hash rate and miners’ actions are also affected by the Bitcoin difficulty adjustment, which occurs approximately every two weeks. As the hash rate increases, the difficulty also increases, meaning more energy is required to mine 1 BTC.
A higher hash rate can only sustain lower prices for so long because miners’ production costs struggle to rise while their profits fall. Therefore, either the price must rise or the hash rate will eventually fall.
Currently the price has dropped significantly in relation to the hash rate. The last time this happened was in June and a rally followed.
Related: Bitcoin Miners Need BTC Price Above $98,000 by Halving – Analysis
In addition to the rise in hash rate, there appears to be renewed mining interest from nation states. The country of Oman has announced plans to produce 7% of Bitcoin hashrate in less than two years.
JUST IN: Oman plans to produce 7% of the world’s #Bitcoin hash rate by June 2025! pic.twitter.com/HOJDlCcyBU
— Crypto Rover (@rovercrc) September 10, 2023
Bitcoin addresses with 0.1 BTC at all-time high
Bitcoin traders have remained strong throughout the bear market, with the number of wallets holding 0.1 BTC or more reaching 12 million for the first time. This trend has continued despite the current price action within a range with occasional corrections.
Bitcoin addresses with a balance of over 0.01 BTC against the price. Source: Check out Bitcoin
This shows a certain level of confidence in the asset class despite everything else happening in the market. Acceptance is increasing, even if prices disappoint.
While 0.1 BTC may have once been an insignificant amount, it is significant today as it is equivalent to approximately $2,500 at current prices. The fiat value can be much higher in other currencies. The fact that 12 million companies have accumulated so much Bitcoin shows how seriously the world has started to take such an investment.
Bitcoin balances held on exchanges are trending downward
The number of wallets holding significant amounts of Bitcoin has also increased, while the amount of Bitcoin held on exchanges has been trending down since FTX collapsed in November 2022. This trend has increased since April 2023. This suggests that individuals are taking self-custody of their coins, perhaps underscoring their disinterest in selling in the near future.
BTC price compared to exchange balance, one-year chart. Source: Coinglass
In the last week, the BTC balance held on exchanges fell from 1.88 million to 1.84 million. Historically, inflows of coins to exchanges have usually preceded a period of selling pressure, while outflows from exchanges have driven the price of Bitcoin higher.
Taken together, these three metrics show that investors’ thesis to buy Bitcoin has become stronger than ever. Bitcoin miners continue to mine, hodlers continue to hoddle, and individuals continue to retain custody of their coins.
This article does not contain any investment advice or recommendations. Every investment and trading activity involves risks and readers should conduct their own research when making their decision.
Learn Crypto Trading, Yield Farms, Income strategies and more at CrytoAnswers
https://nov.link/cryptoanswers