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The cryptocurrency market has attracted a huge amount of people from all over the world in recent years. Those who have been on the market since the beginning already know the different models followed by Bitcoin (BTC).
In an article written by the cryptocurrency analyst Pedro Febrero, he shows the different types of cycles Bitcoin and the encrypted world has lived in recent years.
The article begins by saying that the best time to buy or sell cryptocurrencies is to take Google Trends into account. When people search for the term, the most is because the price has reached their peak. If everyone tries to buy in this market, the best a trader could do is sell.
The author provides the following trading tips:
- First: buy when there is blood in the streets;
- Second: buy the rumors, sell the news;
- Third: buy when there is fear, sell when there is hype.
It is also important to look at different variables when making an intelligent decision. He said that one of the most important indicators he found was the correlation – at least possible – between the adjustment of hashing difficulty and price fluctuations.
According to Element Digital Asset Management, historical cycles suggest that the market has to experience between six and twelve months of flat-rate growth in downward prices. Febrero says that the miners leave the market when this happens, something that could be connected to the end of the bearish cycle.
He mentions that there are two different hypotheses that have more or less proved to be true. If there are more miners at the start, it is easier to extract Bitcoins. This means that there is less energy needed to extract each block. Because there is less energy needed to extract each block, costs are reduced.
However, it is important to take into account the different variables that influence the price before making a decision on the market.
Febrero continues analyzing the 20 richest Bitcoin addresses. According to him, there are 4 addresses that have had the first UTXO in 2016 or 2018. At the same time, it states that the average transaction was worth about $ 5,940,740.74.
He also mentioned that 50% of all the first 100 richest addresses were created in the last two years. Furthermore, these UTXOs are worth hundreds of times more than all UTXOs of combined exchanges. By the way, the analyst says there is a possibility that these addresses start a race towards the top.
Beyond that, he says so Bitcoin distribution in the market seems fairer than global legal currencies. However, he states that he does not believe these two resources are comparable.
Pedro Febrero also mentioned the power of hashing and how it can affect the market. Consider this metric one of the most important for Bitcoin. The hash rate is the amount of energy that the Bitcoin network uses to process transactions.
Show a chart where you can see the growth of the hash of the Bitcoin network over the past decade. You can analyze which miners are expecting the future price of Bitcoin.
An interesting point that also marks is the halving of events that took place in the market. The first halvening took place on 1 November 2011 and the second halvening took place on 1 June 2016. For 1 June 2020, the next period of easing will take place.
Events that slow down are things that could have an important effect on the market. Miners' sales pressure will be reduced and the number of BTCs available will grow at a slower pace. This means that with an increasing number of individuals buying Bitcoin, the price should be positively impacted.
Febrero says that at the end of 2020, Bitcoins should be traded between $ 15,000 and $ 36,000. However, volatility will always be present in the market.
He goes on to explain that there are three important variables to keep in mind: transaction capacity (linked to the number of transactions per second), typical characteristics of the transaction (transaction size) and settlement guarantees.
The transaction rate and average transaction size allow analysts to know the economic throughput of the system. This is a measure of financial bandwidth per unit of time. The analyst advises users to extend the focus beyond simple transaction counting, which is just one component of economic throughput. It recommends taking into account the average transaction size multiplied by the number of transactions taking place on the network. This would give the value flowing through the system per unit of time.
There is another thing that takes into account when evaluating the market. He compares the growth of work with Bitcoin with the price of Bitcoin in terms of USD. There were 1775 job openings related to cryptocurrency and blockchain technology according to Glassdoor Economic Reserach. This shows that employers remain optimistic about the future of the cryptocurrency market.
Febrero concludes by saying that every time Bitcoin reaches new lows, these points become higher than previous prices. This also happens to new highs. They reach the previous levels and go even further. And remains optimistic about the future.
On the question, he commented:
"Even if the price continues to fall, every time we reach new lows, they are getting higher than the previous one, the same is happening at new highs, if we align low volatility to the previous points and we take the whole argumentation into consideration. , I believe that the price of Bitcoin will sooner or later change ".
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