Following the technical analysis published on CoinSyncom on January 6th, Bitcoin (BTC) has broken the bearish formation and is stampeding towards $9,000. The price of the pivotal cryptocurrency has made a move a few hours after the mentioned article, and, in a few waves, skyrocketed to the current $8,800.
This is the first positive move out of the falling wedge formation that started on June 26th, 2018 at $13,900. During the last six months, Bitcoin never really showed the signs of a reversal. However, since late December, the community regained some of the lost optimism.
Bitcoin (BTC) Mining Difficulty Adjustment
Despite all the technical signs, there is one of the fundamental nature that possibly had much to do with the recent pump. The mining difficulty of the Bitcoin network increased today, making it more difficult for miners to get their hands on the network’s rewards. This time, the difficulty increased by 8.999%, which is by no means a small thing. Especially in the year of the Bitcoin halving.
This means that in 2020 the supply of Bitcoin in the market will be reduced twice, making the biggest cryptocurrency even more scarce.
Is This the Beginning of the Bull Run?
This is a tough question to answer. Primarily because cryptocurrencies are the most unpredictable assets. However, we can try to explain a few circumstances which may prove important in the coming weeks.
The first prerequisite for Bitcoin to turn bullish is purely technical. The price needed to break out of the long term bearish formation. It seems that it did. Nevertheless, traders should still wait for today’s daily candle to close above $8,400 for the confirmation of the breakout. If that happens, the first major resistance is at $9,400. It will be interesting to see how if at all Bitcoin will break through the level. It will show the level of investors’ trust towards BTC and the crypto market in general.
Another thing needed for a new bull run is of a fundamental nature. The halving so anticipated by the community will come to pass soon. Historically, every aftermath of every halving brought us the new all-time high price. Moreover, it launched a full-scale bullish sentiment towards all cryptocurrencies, resulting in a prolonged bullish market period. This time, we also have a prelude in the form of today’s difficulty adjustment. If the current price movement is the announcement of the halving, we can really look forward to the second half of 2020.
If Bitcoin needs to fulfill more than one condition for a bullish trend, we are on the verge of getting what we need to regain the optimism abandoned at the beginning of 2028. The only thing that we can do now is to prepare our seatbelts.
We might be needing them soon. For that trip to the moon…