Happy New Year to all of you! I hope everyone has a healthy, happy and prosperous 2021. All of us have enjoyed the massive run in prices of most of the cryptocurrencies out there. As a firm BTC believer and HODLer I have greatly enjoyed reaching new highs and as many already described it - the parabolic run.
The latest pull back and slow down of the rally is perhaps just the foundation for the rally in prices to continue in 2021. I strongly believe for myself that this price appreciation has a solid background and is based entirely on the main feature of BTC, which is its scarcity and deflationary nature.
I have monitored several indicators, which help me gauge the strength of the rally and one of them published by COINBASE still shows confidence in the BTC rally:
Market cap: €481.7B
Volume (24 hours): €62.5B
Circulating supply: 18.6M BTC
Popularity on Coinbase #1 most held
Trading activity: 60% buy - 40% sell
Typical hold time: 85 days
Naturally with the rally gaining momentum it is expected to have profit taking and the trading activity has deteriorated from 80-85% buy, to 60% buy, however it still shows confidence in the rally and points to its strength
However, the health of the mining network is to me the major indicator, whether we could expect the price level to hold and hopefully further extend. I was worried that there was little change in December in mining capacity and difficulty level started retreating from its ATH levels. This should be quite counter-intuitive as mining should be quite profitable in these conditions. I was actually planning my first blog post for 2021 to be one voicing concern of expected BTC price activity.
I set out today to write my post and opened again BTC.com Stats to pull out latest numbers to support my thesis. However I was pleasantly surprised:
We have now reached again 150 EH/s. This level of activity also points to significant change in difficulty level:
In the next four days we are expected to reach a 19.83 TH difficulty level, which would almost much the ATH from October of 2020.
I will continue to monitor how this indicator changes in the next 18 days (the next two difficulty resets), however I am now a lot more confident that this rally will have steam to continue.
Let us hope that government and taxation FUD will not intervene in a very negative way as BTC is now becoming a mainstream benchmark accepted widely by retail and institutional investors. We do have a solid foundation to step on, so I will continue to HODL and accumulate!
