Bitcoin’s recent poor price action has led many analysts to predict further bearish momentum in the coming weeks. However, it’s important to remember that just a short while ago, investors and crypto pundits were touting some positive fundamental metrics that still hold true today.
One such metric is Bitcoin’s hashrate, which measures the amount of computing power dedicated to mining BTC. Recently, the hashrate reached a record high, indicating the overall strength of the network and the continued interest from miners. This high hashrate means that there is more security in the Bitcoin network, and it highlights the faith that miners have in the future of Bitcoin.
There is some debate over whether a high hashrate actually constitutes a bullish signal. Some investors believe that increased hashing power is a sign of an impending price increase, while others say the opposite or claim that no correlation exists at all. However, when looking at the data from the past year, there does appear to be a distinct relationship between hashrate and price.
This relationship makes sense because as prices rise, miners will start mining more, leading to an increase in hashrate. The hashrate is also influenced by the Bitcoin difficulty adjustment that occurs every two weeks. As hashrate rises, so does the difficulty, which means it takes more energy to mine 1 BTC. This ultimately leads to higher production costs for miners and lower profits, so either the price must rise or the hashrate will fall at some point.
Currently, the price has fallen significantly relative to the hashrate, and history has shown that a rally can follow such a pattern. Additionally, there seems to be renewed mining interest from nation-states, with Oman announcing plans to produce 7% of the global Bitcoin hashrate by June 2025. This further emphasizes the long-term faith that miners have in the Bitcoin network.
Another positive metric to consider is the number of Bitcoin addresses holding 0.1 BTC or more, which has reached an all-time high of 12 million. This demonstrates that Bitcoin hodlers have remained strong throughout the bear market and have continued to accumulate more BTC despite the current range-bound price action. It shows a level of trust in the asset class, even in the face of disappointing prices.
While 0.1 BTC may not seem like a significant amount, it represents around $2,500 at current prices and can be even higher when priced in other currencies. The fact that 12 million entities have accumulated this much Bitcoin indicates that the world is taking this investment seriously.
Lastly, the number of wallets holding significant amounts of Bitcoin has been rising, while the amount of Bitcoin held on exchanges has been trending lower since the collapse of FTX in November 2022. This trend has intensified since April of this year, suggesting that individuals are opting for self-custody of their coins and possibly signaling their disinterest in selling in the near future.
When considering these three metrics together, it becomes clear that the thesis for buying Bitcoin has only grown stronger. Miners are continuing to mine, hodlers are accumulating more BTC, and individuals are taking custody of their coins. This demonstrates a belief in the long-term potential of Bitcoin, despite its current price fluctuations.
It’s important to note that this article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research before making any decisions.