Bitcoin investors are enjoying the merry ride currently. BTC is trading around $9,555 and is up by 1.16% from its previous close. However, a group of analysts believes it is the perfect calm before the storm.
It is not as if Bitcoin is not displaying any signs of trouble. But people are simply choosing not to notice them. The situation is a lot similar to Bitcoin’s massive drop in 2018. Ignorance spelled doom for several investors back then as well.
Analysts smell smokes of trouble coming from Bitcoin
Miners are the heart of the Bitcoin network. The halving that takes place every four years has a drastic impact on the miners. Only this year, the effect was even more profound. It is because the reward awarded is only 6.25 BTC now.
This halving forced several miners to move out of the network. It was not a profitable business for them anymore. The direct impact of the miners moving out was on the Hash Rate.
Bitcoin Hash Rate, in a way, determines the security of the network. The reduction in the Hash Rate directly jeopardizes the safety of the node. Therefore, the decrease in the number of miners is not something that can be ignored.
Here is the BTCUSD daily chart. Source: TradingView.com
Narratives of the unsuspecting Bitcoin fans
BTC can be a hedge against deflation in the future. However, one should not be ignorant of the current scenario. Investing in BTC might be a great decision. But that decision should be backed by one’s research and not a blind herd-following!
People are saying that open interest in Bitcoin CME data shows its bullish nature. However, they need to understand that a small number of contracts hold a lot of the OI. It indicates the presence of Bitcoin whales.
The retail trader hardly thinks about this and, therefore, falls into the trap and gets ‘rekt’ more often!