Bitcoin (BTC) Cycle is Reaching a New Beginning from Analyst Tracking Crypto Market Movements
The cryptocurrency market has attracted an enormous amount of individuals from all over the world during the last years. Those who are in the market since the very beginning already know the different patterns that Bitcoin (BTC) follows.
In an article written by the cryptocurrency analyst Pedro Febrero, he shows the different kinds of cycles that Bitcoin and the crypto world has experienced in the last years.
He starts the article by saying that the best time to buy or sell cryptocurrencies is to take into account Google Trends. When people are searching the term the most is because the price reached their peak. If everyone is trying to buy in this market, the best what a trader could do is to sell.
The author gives the following trading tips:
- First: buy when there’s blood on the streets;
- Second: buy the rumours, sell the news;
- Third: buy when there’s fear, sell when there’s hype.
It is also important to take a look at different variables at the time of taking an intelligent decision. He said that one of the most important indicators that he found was the correlation – at least possible – between hashing difficulty adjustment and price swings.
According to Element Digital Asset Management, historical cycles suggest that the market needs to experience between six to twelve months of flat difficulty growth for prices to bottom. Febrero says that miners leave the market when this happens, something that could be related to an end of the bearish cycle.
He mentions that there are two different hypothesis that have more or less proven to be true. If there are more miners leaving, it is easier to mine Bitcoin. That means that there is less energy needed to mine each block. As there is less energy needed to mine each block, costs are reduced.
Nevertheless, it is important to take into account the different variables that affect the price before taking a decision in the market.
Febrero continues by analysing the top 20 richest Bitcoin addresses. According to him, there are 4 addresses that have had the first UTXO in 2016 or 2018. At the same time, he mentions that the average transaction was worth close to 5,940,740.74 dollars.
He also mentioned that 50% of all the top 100 richest addresses have been created in the last two years. Furthermore, these UTXOs are worth hundreds of times more than all the UTXOs of exchanges combined. On the matter, the analyst says that there is a possibility for these addresses to start a race to the top.
In addition to it, he says that Bitcoin distribution in the market seems fairer than global fiat currencies. However, he mentions that he does not believe that these two assets are comparable.
Pedro Febrero has also made a mention to hashing power and how it can affect the market. He considers this metric one of the most important ones for Bitcoin. The hash rate is the amount of power that the Bitcoin network uses for processing transactions.
He shows a graphic in which it is possible to see the Bitcoin’s network hash growth in the last ten years. It is possible to analyse what miners are expecting for Bitcoin’s future price.
An interesting point he also marks is the halving events that took place in the market. The first halvening took place on November 1st, 2011, and the second halvening took place on June 1st, 2016. For June 1st, 2020, the upcoming halvening is going to take place.
The halvening events are things that could have an important effect on the market. Miners’ selling pressure will be diminished and the number of BTC available will grow at a slower rate. That means that with an increasing amount of individuals purchasing Bitcoin, the price should be positively affected.
Febrero says that at the end of 2020, Bitcoin should be traded between $15,000 and $36,000. However, volatility will always be present in the market.
He keeps on explaining that there three important variables to take into account as well: transaction capacity (related to the number of transactions per second), typical transaction characteristics (transaction size), and settlement assurances.
Transaction rate and average transaction size allow analysts to know the economic throughput of the system. This is a measure of the financial bandwidth per unit of time. The analyst recommends users to broaden the focus beyond simple transaction count, which is just only one component of economic throughput. He recommends to take into account the average transaction size multiplied the number of transactions that take place on the network. That would give the value flowing through the system per unit of time.
There is another thing that he takes into account at the time of evaluating the market. He compares the Bitcoin job growth with Bitcoin price in terms of USD. There were 1775 job openings related to cryptocurrency and blockchain technology according to Glassdoor Economic Reserach. This shows that employers remain bullish and positive about the future of the cryptocurrency market.
Febrero concludes saying that every single time that Bitcoin hits new lows, these points become higher than the previous prices. This also happens to new highs. They reach the previous levels and go even further. And he remains bullish about the future.
On the matter, he commented:
“Although price keeps falling, each time we hit new lows, they're becoming higher than the previous. The exact same is happening to new highs. If we align a low volatility to the previous points, and we take into account the whole argument made, I perceive Bitcoin’s price will sooner or later moon.”