Hashrate Crash Then Price Crash (FREE)

Week 39: September 24, 2019

Every week we review BTC price drivers from last week and perform both sentiment and technical analysis to help forecast the future.

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Week 38: September 17, 2019 - September 24, 2019

The massive decline in BTC this week was also seen across the board in altcoins as seen in Ethereum (-13.8%), Litecoin (-21.2%) and EOS (-29.6%). Coming off the major decline, we are issuing a HOLD on Bitcoin for the following reasons:

Rating: HOLD

BTC Market Cap: $154.7B

BTC Price: -15.9% ($10,241.27 to $8,617.65)

BTC Active Addresses: -5.4% (777.7k to 735.5k)

BTC On-chain Transactions: -15.4% (344.3k to 291.2k)

Technical & Sentiment:

  • Price trend has just broken to the downside so it’s logical to fade any rallies in price

  • Sentiment has finally broken from the declining wedge, the next big move could mark a trend top

Positive Price Drivers:

  • New VC fund-raising by Lightning Network partners continue to drive mainstream adoption by making Bitcoin payments cheaper and faster

  • Bitcoin continues to strengthen it’s core focus as a store of value as new payment processors and financial products come online

Negative Price Drivers:

  • Bitcoin Network hashrate dropped 30% overnight, making the community question if BTC is actually decentralized

  • Bitcoin has left the 93-day technical ascending triangle to the downside, indicating a largely bearish trend

BTC Price Analysis:

On a macro level:

IF this happens, then we buy:

  • Bitcoin price trend suggests the recent selloff was the bottom, indicated by a high volume reversal

  • President Trump and the appropriate regulators open the path for Libra to be launched in the US

IF this happens, then we sell:

  • Bitcoin’s correlation to the US Stock market increases and they both decline on global economic fear

  • Bitcoin mining power continues to drop drastically, indicating a longer bear market is among us

BTC Sentiment:

Price Drivers This Week:

Hashrate Crashes 30% & No One Knows Why

The hashrate of the Bitcoin network fell from about 107 exahashes to a little over 59 exahashes over the span of about 14 hours while Bitcoin was still trading at $9,400. This implies that over a half-day nearly a quarter of all the safety of the Bitcoin network has been removed, rendering the network more susceptible to attack than it had been before. Interestingly, Bitcoin price by the end of the day wound up down 12%, reminding the community of the correlation between price and hashrate.

Bitcoin's mining network is comprised of thousands of computers that mine each new block by adding one byte of data — or one hash — to a publicly available database. Those computers can be collectively referred to as the "pool," and are then used to maintain a block index, tracking each transaction that enters and leaves the network.

The substantial decrease in the hashrate of Bitcoin has outlined several problems that affect the safety and decentralization of the network. An overnight loss in almost half of the power of the network may either indicate that a single actor actually owns a larger portion of the power of the network than previously imagined, or that multiple actors that constitute a large chunk of hashrate share the same infrastructure, such as electrical grid in a particular country.

Roughly 75 percent of the complete mining energy of Bitcoin may be situated within Chinese boundaries, according to latest studies. These “jurisdictional attack,” where a majority of hashrate is located in a particular location, leaves the network open to authorities compromising the network by targeting local mining pool operators, without the rest of the network fully knowing.

Hot Off The Press:

Second-Largest German Stock Exchange Launches Regulated Bitcoin Trading Platform

Bitcoin Lightning Network Specs Pass First ‘Formal’ Security Test

30 Brands and More Than 25,000 Stores Will Soon Accept Bitcoin in France, With Altcoins on the Way: Report

What the top personalities on Twitter are saying:

That’s it for the BTC weekly report from September 17 - September 24, 2019. Come back Wednesday for our Industry Special report.