Bitcoin has been trading sideways for days after crashing below $26,000 for the first time since March. This has led to a general crash in the crypto market as altcoins follow Bitcoin’s trends. As a result, many investors have become pessimistic.
It seems there’s light at the end of the tunnel though, as recent data shows the Bitcoin mining difficulty has reached a new all-time high. The mining difficulty is a measure of the difficulty and time required to successfully mine a Bitcoin block.
A soaring mining difficulty is usually an indication of rising miners’ interest in the crypto asset. This is a positive development, especially as the price of Bitcoin has been trading sideways, and mostly bearish recently.
Data from on-chain data analytics platform btc.com shows that the difficulty has increased 6.17% in the last week, as well as network activity, which brings it to a new record high. This shows that miners are not discouraged by Bitcoin’s crashing price, meaning they remain positive about the future of the crypto asset.
What this means for Bitcoin
There have been many reasons for miners and other investors to panic recently. However from the data, this is not the case, even though sellers seem to maintain dominance currently. Miners maintaining a positive attitude in the face of this shows that they are hopeful of Bitcoin’s rebound for a number of reasons.
First is the upcoming halving in 2024. This is an event that is held once in roughly four years, when the block reward for Bitcoin is reduced by half. Historically, this eventually leads to an upward price movement of Bitcoin, and many people now look forward to it in hope of a bull market afterwards.
Miners must be seeing such upcoming event as a reason to keep mining and earning more Bitcoins, especially as the price is still low so that there will be more gains when there is a rebound.
Secondly, the chances of a Bitcoin spot ETF approval has never been higher. Many crypto companies have applied for a spot Bitcoin ETF in the past, but none has been approved. However this time, the securities and exchange commission in the U.S. has requested for some adjustments to be made, which have been done, making it much more likely that at least one of the applications will be approved.
If this happens, more institutional investors are expected to enter the crypto space, especially to invest in Bitcoin, which can lead to a significant price gain for the asset. According to Fundstrat’s co-founder Tom Lee, the approval can lead to the price of Bitcoin rising to between $150,000 and $180,000.
There has also been a trend of whales holding tightly unto their Bitcoin stashes, which also shows positive sentiments.
Bitcoin’s price in the short term
Bitcoin currently trades at $26,024 after rising back to this level following the crash. Whether the rising trend will continue remains to be seen, but some analysts say that the price could crash further to $20,000 if bears continue to maintain control.
So far, the asset has lost over 10% over the last seven days. Another analytic point of view says it is now at its most oversold level, suggesting a rebound may be close.