• An analyst has predicted that Bitcoin prices may rise above the current resistance level at $23,800 to $25,500 before dumping below immediate support lines towards $20,000, or worse.
• This prediction is based on the observation that when the Bitcoin hash rate records new highs, as is the case in late January 2023, coin prices tend to retrace as the upside momentum fades.
• The analyst is convinced that peaking Bitcoin hash rates can diverge with prices, impacting coin valuation.
An analyst has recently offered his opinion on the current state of the Bitcoin market. He believes that, based on recent CryptoQuant data, the Bitcoin hash rate will continue to increase in the coming weeks, and this may have an adverse effect on the coin’s price.
The analyst notes that when the Bitcoin hash rate records new highs, as is the case in late January 2023, coin prices tend to retrace as the upside momentum fades. He believes that the rising hash rate will lead to more users and mining farms powering on their rigs, further pushing up the hash rate. This increase in the hash rate could lead to strong liquidations that could unwind mining activity, pulling down prices.
As of January 26, the Bitcoin hash rate had increased to 305 EH/s, an all-time high. Hash rate is the total computing power connected to the Bitcoin network. If BTC prices continue to pump, the analyst predicts that prices may rise above the current resistance level at $23,800 to $25,500 before dumping below immediate support lines towards $20,000, or worse.
The analyst is convinced that peaking Bitcoin hash rates can diverge with prices, impacting coin valuation. He believes that this divergence could lead to a decrease in Bitcoin demand, as miners may be tempted to cash out their profits and move on to other projects. This decrease in demand could cause prices to drop further.
The analyst believes that the current Bitcoin market is a precarious one, and investors should be cautious when investing. He recommends that investors take note of the Bitcoin hash rate and use it to assess the market before investing. With this information, investors can make better decisions when it comes to investing in the cryptocurrency.