Source: PaxForex Premium Analytics Portal, Fundamental Insight
Following an impressive surge at the beginning of 2023, Bitcoin's momentum is being tempered by ongoing macroeconomic uncertainties and other factors. On August 16th, Bitcoin experienced a significant decline, losing over 10% at one point. This marked the conclusion of an unusually prolonged period of historically low volatility.
The cycles of growth and decline that Bitcoin is known for have resulted in this recent sell-off, which isn't entirely unexpected. However, instead of relying on intuition to gauge the potential for Bitcoin to enter a new bullish phase and surpass previous highs, it's important to delve into the unique attributes that define Bitcoin. This deeper understanding reveals that the current juncture might present a favorable opportunity for investors to consider increasing their Bitcoin holdings, particularly as its price remains below the $30,000 threshold.
Due to its decentralized nature without a central governing entity, Bitcoin holders can find reassurance in the blockchain's security. Recent trends have only bolstered this confidence.
The hash rate serves as a measure of Bitcoin's computational prowess. As this hash rate increases, so does the network's security and robustness. Impressively, the hash rate has now achieved an unprecedented peak, reflecting its consistent growth over more than a decade, despite occasional fluctuations.
A rising hash rate signifies an influx of miners utilizing more advanced machines, thereby enhancing the network's integrity. Even in the face of challenging market conditions, this sustained growth underscores the network's resilience and solidifies Bitcoin's standing as the most dependable and secure blockchain. This enduring strength remains a pivotal factor in Bitcoin's enduring value proposition.
Adding to Bitcoin's uniqueness is a built-in mechanism known as halving, coded into its structure. This event takes place every 210,000 blocks, approximately every four years, halving the issuance rate awarded to miners who successfully mine a block. The present miner reward of 6.25 bitcoins is poised to reduce to 3.125 bitcoins in about eight months with the next halving.
The diminishing supply growth rate of Bitcoin plays a central role in the fundamental dynamics of supply and demand. As fewer bitcoins enter circulation and assuming demand holds steady, prices are likely to rise.
The upcoming halving itself could be a compelling reason to seize the recent dip in Bitcoin's value. Data reveals a distinctive pattern in the supply of bitcoins on exchanges. The supply peaked at around 3.2 million coins in March 2020, subsequently declining to the current 2.2 million – aligning with the spring of 2018 levels.
This trend finds its roots in Bitcoin's halving. Prior to March 2020, Bitcoin's growth rate appeared to surpass demand, causing an accumulation of coins on exchanges. However, this dynamic shifted after the most recent halving in May 2020.
With the next halving on the horizon in April 2024, Bitcoin's available supply is poised for another jolt, leading to further scarcity. Coupled with the slowing pace of supply growth, this scarcity might intensify Bitcoin's price fluctuations based on supply and demand dynamics. Hence, the recent dip below $30,000 could present a strategic opportunity for investors to capitalize on, particularly as they navigate short-term market fluctuations.
As long as the price is above 25000.00, follow the recommendations below:
- Time frame: D1
- Recommendation: long position
- Entry point: 27197.00
- Take Profit 1: 29000.00
- Take Profit 2: 31800.00
Alternative scenario:
If the 25000.00 level is broken-down, follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 25000.00
- Take Profit 1: 23500.00
- Take Profit 2: 21500.00
