4 Key BTC Metrics Show All Hope Is Not Lost for Crypto Markets

Source: CointelegraphChina

Editor’s Note: Original title: 4 key Bitcoin indicators show that not all hope is lost in the BTC market

The price of Bitcoin (BTC) briefly fell to $3,700 on March 12, closing at $4,970 on the same day. As of March 13, the price of the currency recovered from the downward trend and closed at $5,563, with a return rate of over 11%, which is very impressive.

Cryptocurrency market daily performance

Recent market turmoil, both in traditional markets and the cryptocurrency space, has raised questions about Bitcoin’s price evolution and its critical network functions. Let’s take a look at four key Bitcoin price and network metrics to gain some insight into the future of the cryptocurrency market’s largest asset.

The stock-to-flow model remains unchanged

From the stock-to-flow model (a Bitcoin price prediction model based on the comparison between the available circulating supply (stock) and the new output (output)), the actual price of Bitcoin on Thursday was below the prediction line but within the expected threshold.

Bitcoin Stock-Output-Price Model

This is not the first time that the Bitcoin price has fallen below the 365 DAS price model, as for 6 months (mid-November 2018 to mid-May 2019) the Bitcoin price rebounded within the predictions thereafter.

Bitcoin stock-to-flow price model from July 2018 to December 2021.

In a tweet on March 13, PlanB, the creator of the stock-to-flow model, said that “Bitcoin is very volatile around the model value.” Therefore, according to PlanB, the predicted price has not changed considering the approach of the next halving cycle. The current 365-day average price model predicts a price of $8,426 at the estimated halving time (May 9, 2020).

Bitcoin NVT Signal

On Sunday, Bitcoin’s price was hovering around $5,400, while its actual price on the NTV signal indicator was $5,596, indicating that the asset was in a buy range after Thursday’s price crash. Currently, the NTV signal is 49.5, with 45 indicating oversold conditions.

For traders considering short-term buying, the model suggests that there is an opportunity for quick profits based on the current price and the 200-week average. Considering the 200-day average price is $8,587, Bitcoin shows room for long-term growth, and the upcoming halving event in May also adds a lot of evidence to this bullish view.

Bitcoin NVT Signal

What about computing power?

In terms of hashrate, it has been declining since reaching historic levels in March. Hashrate is the computing power required to confirm transactions on the Bitcoin blockchain. Since March 11, it has been on a slight upward trend despite a sharp 50% drop on March 12.

Hashrate values ​​from February 23, 2020 to March 13, 2020.

On March 13, the hashrate was close to 110.38E per second, the same level as at the end of February. However, the recent correction in February did not stop the long-term growth trend since the historical hashrate was set at the beginning of the year.

Increased difficulty usually leads to higher prices

The difficulty level required for miners to validate the Bitcoin blockchain, that is, has always been a constant and is increasing. On March 8, despite recent unfavorable market conditions, the price drop meant that mining participation increased and the difficulty increased.

Average difficulty from January 2020 to March 13, 2020

Trading surges on March 12

Bitcoin transaction volume spiked on March 12, as is typical when markets see significant volatility. Bitcoin transactions settled in U.S. dollars also surged on March 13, with daily transfers falling to around 277,000 in late February, a level that has remained normal since the beginning of the year.

Number of daily transfers from February 23, 2020 to March 13, 2020.

As commentary surrounding investor confidence in Bitcoin raises questions, Bitcoin’s fundamental network functionality is showing consistency despite volatility and uncertainty gripping the broader market.

Looking ahead, with the market so panicky, strong players may be looking for opportunities to buy at low prices and actively position for long-term returns.

However, the global spread of the COVID-19 virus may continue to cause short-term liquidity problems in the market and eventually lead to a major bear market.

In addition to the fundamental analysis of the Bitcoin network, its shared safe-haven correlation with gold could give investors confidence during the current mid-term crisis, even though it is currently in a downtrend.

Original link: https://cointelegraph.cn.com/news/4-key-bitcoin-metrics-show-not-all-hope-is-lost-for-btc-price