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Changes in Mining Is Driving Bitcoin Price: Will Bear Market End?

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Less efficient mining operations are leaving the network and are hence lowering the “hashrate” which is technically the power of mining.

Analysts are reading into a major indicator to study to forecast market action. A ‘change’ in difficulty faced by miners of bitcoin is the basis of their latest analytics. Their research has found that the less efficient mining operations are leaving the network and are hence lowering the “hashrate” which is technically the power of mining.

 

Element Group Research Findings

Heading this research segment is Element Group, asset analysis, and consultancy service in the virtual cryptography space.

The organization’s work reveals that there is a dependence that was unearthed between mining difficulty and the movement which bitcoin prices take.  The specific finding of the group is that – in the eventuality of a reduction in the mining difficulty occurrence is sharply correlated to the market cycles reaching the bottom. In this phase, bitcoin sale pressure will have subsided, and prices will be at their least levels.

 

 How is mining less difficult now?

The difficulty in mining is lowered since the script always attempts to keep mining to ‘ten minutes per block’ and has been adjusting the ‘difficulty so as to overcome the loss of hashrate.

Technically, it is indicated that the fall in mining difficulty will invariably mean the power of mining is exiting the network, because of the script-adjustment timed for 10 minutes.

Miners are likely to leave the network, reason analysts though they are not able to provide exact or clear answers in this aspect. According to reports by Element Group, the lower is the bitcoin price then the increase is the pressure on the mining operations resulting in those which offer the least efficiency to quit the operations. When this happens, the network’s hashrate will be lowered and eventually the difficulty in mining.

When rewards for bitcoin mining is higher as well as higher efficiency in mining, there is a decrease in the selling pressure coming from the miners who are yet engaged in the mining activity and sell less number of bitcoins apart from costs of operations.

There is evidence of such a play-out from historical data. There was a sudden hashrate rise in 2018. This was equivalent to 500%. Then it was leveled during which the prices dropped and eventually consolidated at 6,000 range. During this phase, the drop from the high was in the range of $19,000 and more. This resulted in more hashrate for fewer dollar returns. It also resulted in more competition.

The hashrate leveling led to miners leaving the operations as work became very hard. This led to the consolidation of the network as well as the mining power and is currently unprofitable for many. The members of the loss-making group were typically novices at mining.

 

Less difficulty will end the bear market

Researchers are indicating that something new shall emerge due to this directional change, and one of which could be the end of the bear market. There are many celebrity cryptographers who have claimed that bitcoin price will always follow hashrate and hence the price stability will always remain static.

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Donald Trump policies push Mexico to Bitcoin

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Mexico has seen a new all-time high trading volume on localbitcoins. This comes out on the back of the announcement from the Trump Whitehouse.

Mexico has seen a new all-time high trading volume on localbitcoins. This comes out on the back of the announcement from the Trump Whitehouse that remittance payments of Mexican migrants in the United States of America will potentially be the target of new restrictions essentially ending the possibility of Mexican migrant workers to be able to cheaply send money back home to their families.

 

Mexico adopting Bitcoin:

Mexico has been experiencing a massive increase in the number of transactions on localbitcoins. Mexican migrant workers are believed to be exploited by the remittance companies which are charging around 10% fees. What is essentially being discussed here by the Trump Whitehouse is a new tax on these migrant workers. The number that they are currently floating around is a 3% tax on the remittances going from the USA to Mexico. This may not seem super crazy but considering the $33.4 billion which were sent to Mexico in 2018 alone, that extra 3% could mean $1 billion more per year for the United States government.

 

98% of the transactions that were sent during the last year, were sent via electronic means which means that there is actually a very strong remittance route that is ready for mass disruption going from the United States to Mexico and Bitcoin could be the perfect answer. However, the average size of a remittance payment from the United States to Mexico is $322 last year and the problem is that if the fees rise again exponentially on bitcoin, then bitcoin might not be the ideal cryptocurrency for these kinds of smaller remittance payments. Maybe we are going to see some other cryptocurrency being adopted in that situation. But regardless of which cryptocurrency is used, we can see that there is a clear need for disruption as government policies again seeks to impede or overly exploit the free float of money.

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Bitcoin Crashes Downwards: Is BTC Going to Fall Back to $4000?

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Bitcoin fell down to test the $5000 support level. If the current support around $5000 is broken, BTC might really crash to $4500 and $4200 support levels.

Bitcoin fell down to test the $5000 support level which is the most crucial level for BTC currently. The downward correction started after bitcoin tested the $5500 resistance level yesterday at around 18:00 UTC.

 

The resistance around $5500 proved very strong and pushed the price downwards sharply. The sharp declining pattern attracted a lot of sellers which even pushed the price below $5200 support level and BTC tested the $5000 support reaching up to $5018.

BTCUSD Price Chart- Coinbase

BTCUSD Price Chart- Coinbase

Bitcoin is currently trading around $5070 (at the time of publication) showcasing a bearish pattern.

 

Bitcoin Price Drop:

The sudden price drop has led to people speculating that BTC might soon crash back to the $4000 range. Earlier, analysts were also predicting the sudden rise of bitcoin to be a conspiracy. Also, Bloomberg had also called the sudden rise a Blip. If BTC had successfully crossed over the $5500 range, the next major resistance was around $5800, however, BTC fell sharply losing more than $400 in value over the last 24 hours.

 

The bearish move does not clearly indicate a crash towards $4500 and $4000 range, however, if the current major support around $5000 is broken, BTC might really crash to $4500 and $4200 support levels. With the price of bitcoin falling, other major altcoins are also in the red zone today with Ethereum falling more than 8% in the last 24 hours, XRP falling more than 6% and Litecoin falling around 12% in the last 24 hours.

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China to completely ban crypto mining: Bitcoin about to Crash Hard?

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As reported by Bloomberg, China is moving towards putting a complete ban on mining bitcoin and other crypto as it causes serious wasatage of resources.

As reported by Bloomberg, China is moving towards putting a complete ban on mining cryptocurrencies such as bitcoin. In accordance to a document posted by the National Department and Reform Commission of China, the mining of cryptocurrencies should be completely banned as it causes serious wasatage of resources.

 

China is known to be the largest hub of cryptocurrency mining with huge mining rigs been set up in the country. Earlier, China has also banned small investors to invest in security token offerings or STOs and only large investors with more than $1 million funds are allowed to invest in such projects. Now, the country is planning to take strict action against cryptocurrency miners in the country.

 

Cryptocurrency miners were earlier attracted to China due to their cheap electricity rates and subsidies in the country, however, due to the strict actions being taken by the government with the guidelines of the NDRC which has disincentivized cryptocurrency mining, a lot of miners have shut down their operations or moved to other nations.

 

Largest Mining Pools in China:

China has been a hub for some of the largest cryptocurrency mining polls. Even though the mining pools have been shifting to other countries, there has been some effect of the ban on the market for bitcoin and other cryptocurrencies as the mining is a major part of the overall working of cryptocurrencies.

 

How do you think the complete ban on cryptocurrency mining in China will effect the bitcoin price? Tell us in the comments section below.

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