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Recent analysis of Bitcoin hash price in relation to BTC price action indicates that the cryptocurrency may be nearing a bottom, mirroring conditions observed before the significant breakout in 2021.
Analysis from CryptoQuant
On August 30th, the on-chain analytics platform CryptoQuant published a blog post suggesting that Bitcoin’s price might be approaching a bottom. They pointed out that the hash price, which reflects the revenue that miners earn per terahash per second, is currently at a notably low level.
This observation is crucial as it highlights a repeating trend where historically, periods of lower hash prices have tended to align with Bitcoin price bottoms. A prominent example of this trend occurred in 2020, following the market crash due to COVID-19, when Bitcoin’s price reached significant lows alongside a drastic decline in its hash price.
Historical Patterns of Recovery
However, as 2020 progressed, particularly after the halving event, Bitcoin’s price entered a strong upward path, eventually reaching new all-time highs. This historical context suggests a potential for recovery may currently be in the making.
Miner Behavior Indicates Potential Turnaround
The recent behavior of Bitcoin miners supports this narrative of a potential market turnaround. According to CryptoQuant, miners appear to have resumed accumulation after experiencing a prolonged period of outflows. Notably, miner reserves have returned to levels not observed since June, showing a significant increase since August 24th.
Ki Young Ju, the CEO of CryptoQuant, has commented on a promising trend in the US mining sector, suggesting the end of miner capitulation, with hash rates approaching all-time highs. He also noted that the cost of mining has settled at approximately $43,000 per Bitcoin, indicating that the prevailing hash rate is likely to stay stable as long as Bitcoin prices do not fall below this level. This stability could lead to a price stabilization and recovery.
Speculating on Future Price Movements
Long-term Bitcoin metrics are continuing to support the optimistic outlook for the cryptocurrency this month; however, the timing of the next bullish wave remains a hot topic within the crypto community given the existing market conditions.
Of particular significance is the approaching Bitcoin halving, which could serve as a critical marker for predicting the next price surge. In an August 21st post, Ki Young Ju commented that previous post-halving rallies have commonly initiated in the fourth quarter of halving years. He speculated that “whales won’t let Q4 be boring with a flat year-on-year performance,” hinting at potential significant market activity as the year draws to a close.
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