Bitcoin has increased around 15% in value in the past couple of days, a move that also triggered a technical break that may pave the way for more short-term gains.
Fundamental analysis: Hash rate at historic highs
On the first day of the new year, Bitcoin’s hash rate, a measure of the processing power dedicated to a blockchain, hit a new all-time high of 119 exahashes per second (EH/s).
The latest move higher can be explained by the rise in the price of Bitcoin, as well as the anticipation of the miner reward halving, scheduled later this year.
In general, the hash rate reflects the higher number of miners working on the network. Historically, the increasing hash rate correlates positively to the price action, mostly because higher price levels mean better profits for miners.
While Bitcoin price rose more than 90% in 2019, the hash rate has increased as well, rising from a weekly average of 40 EH/s in January to 80 EH/s by September 2019.
Technical analysis: First target hit
Bitcoin price managed to break out of the mini channel (the red parallel lines) yesterday as the bulls continue to push higher. As they seem to have an upper hand, mainly thanks to the rising geopolitical tensions, Bitcoin is currently attempting to break the second short-term resistance in the context of the 100-DMA (the orange line), which has acted as the first upside target for the Bitcoin bulls.
A clean break of the 100-DMA is likely to initiate another wave of Bitcoin buying, which may ultimately facilitate a test of the major channel (purple parallel lines), whose upper line is currently at $8400.
Finally, the most bullish scenario for Bitcoin assumes a trip to just above the $9000 mark, where the confluence of two resistances meets – the 200-DMA and the major horizontal resistance (the upper blue line).
Bitcoin’s price tends to move historically parallel with the hash rate. In addition to the increased Middle East tensions that have obviously supported Bitcoin in the past couple of days, the latest bullish move may be well-grounded.
Despite the fact that Bitcoin looks bullish short-term, the price action has many identified obstacles on its planned trip to $9000. For this to happen, a daily close above the $8000 handle is essential first.