The world’s leading cryptocurrency has been trading above $7,000 this week until yesterday when we dropped below this level. At the time of writing, we are trading around $6,800 in red. Top altcoins have also moved south while mid-cap altcoins are currently in the mix.
The move though expected came suddenly and just before the sell-off a relatively huge amount of bitcoin was sent to the cryptocurrency exchanges.
The flows of crypto assets into and out of exchanges can provide potential upcoming movement in the market.
During the massive bitcoin crash in mid-March as well, large amounts of funds were moved to and from exchanges. Between March 12th and 13th, a total of 80,000 BTC were sent to crypto derivatives platform BitMEX and 52,000 BTC were also moved out. The price of bitcoin on the exchange also dropped the hardest, falling to $3,600 compared to $3,850 on other exchanges.
This time, 1,000 BTC were deposited on China-originated Huobi exchange just before the bitcoin price dropped below $7,000, noted crypto data tracker, Coin Metrics.
Today, a spike of 150,000 BTC in raw volume was recorded, as per crypto data analyzer Glassnode. However, this volume was the result of an in-house transaction on crypto exchange Bitfinex.
As such, the total raw volume went to 216,244 BTC worth $1.49 billion and the change-adjusted volume was 38,179 BTC worth $263 million.
Bitcoin is yet again recording -7% returns on a year-to-date basis. However, the digital currency is still up 75% since hitting the low in mid-March.
“Bitcoin has remained remarkably stable in the last few weeks and if we zoom out on the chart we can see something quite comforting. The level that it’s trading at now, similar to the stock market, is a level that would have been deemed quite normal throughout 2018 and 2019,” said analyst Mati Greenspan. “This is happening with the third halving only a month away.”
The halving is actually now just a month away with May 11 the estimated date as miners get back to adding more hash power to the Bitcoin Network.
Following the price crash that had some miners unprofitable, the hash rate dropped as these miners powered off their rigs. On March 22, the hash rate fell to 94 Th/s, falling 23.5% from the all-time high of 123.2 Th/s, as per Blockchain.com.
Since hitting the low last seen in December 2019, the hash rate has recovered 12.5%, currently at almost 126 Th/s. Miners are now back on pumping hash rate with just a month left in halving.
Halving of Bitcoin Cash and BSV this week is another reason behind this growing hash rate. Both of these digital assets have their rewards cut in half while the flagship cryptocurrency still has its block reward at 12.5 coins.
This shift from bitcoin fork and fork’s fork had BTC’s hash rate share jumping from 97% to 99% while both BCH and BSV’s share that was at 3% went down to just 1%.
Could this growing hash rate be indicating a recovery in Bitcoin price? It’s hard to tell because the hash rate tends to follow the price.
After the March sell-off, BTC price has been at a “significant discount compared to the historical trend and the Stock-to-Flow model,” notes Arcane Research.
However, analyst PlanB says, “BTC price will take some time to crawl towards model value (like after Nov2012 and Jul2016 halving).”