As you know, Bitcoin has been strong. Let’s look at some indicators.
Bitcoin experienced a sharp rise in May 2019, increasing from around USD 4,000 to USD 14,000 at that time. However, the price fell back subsequently. And it did not last long, falling again to around USD 4,000 during the COVID-19 crisis.
Looking at the current market price, there are some differences from May 2019.
The first difference is the hash rate difficulty, which is an assumption. The hash rate is marking a record high at 120ETH/s. What’s more, Bitcoin has entered a solid cycle where price and hash rate are increasing simultaneously.
The next difference is Bitcoin dominance. Last year, it increased from around 55% in the spring, when it hit bottom, to over 70% in August. This means that investments were almost entirely concentrated on Bitcoin.
This time around, Bitcoin dominance is falling modestly from about 75% to about 70%.
As you can see from the situation of other coins, investments are primarily being made in Ethereum and DeFi. In other words, investors in general are coming back into the market, if not the entire market. The difference in the environment is significant.
There are certainly some factors that have created this difference. While there is not enough space here to analyze them in detail, one of the major factors is cash from quantitative easing.
The current market seems stable and could hold out into the mid to long term. Although Bitcoin suffered a flash crash recently, losing around USD 1,500, long-term investors are likely to reap significant benefits if they don’t get swayed by these micro trends.
*This articre was written by FISCO Guest Analyst, Tetsu ‘BIGSTONE’ OISHI