The Breakout Failed, What Next?
Last week Bitcoin was on the cusp of breaking out to new highs. The move looked strong, the coin was making nice candles, and the indicators were supportive so what happened? Resistance at the round number of $10,000 held the coin in check and sent price action back down to test for support. What actually happened is a test of the market be it by trading whales or other large market player. So far that test is confirming support and the overall bullish trend in prices.
Exiting Times Are Here!
Bitcoin’s halving will happened in about 6.5 hours after I publish this post. This is the third halving and reduces the mining reward to about 6.25 tokens per block. The new mining rate will last for about four years until the next halving when the reward will fall to 3.125 or so BTC per block. Taking the total number of BTC available to mine into account. The current schedule of halving ensures several decades of mineable Bitcoin so there is little expectation the network will fail anytime soon. When the halving happens, it will instantly reduce the number of BTCs available to the market and then support rising price action over the longer-term.
Dominance, Hashrate, and Lost Coins
One of the many factors that is helping to drive BTC prices higher over the longer-term is the growing number of lost coins. Now, to be sure, the term lost coin is a bit of a misnomer. The coins are really lost, we can look at the blockchain record and see right where they are, but they will never be used. These coins are unrecoverable for many reasons including lost passwords, damaged hardware, or coin-burns and account for about 20% of the total supply. That’s quite a bit of lost coinage.
The hash-rate and dominance of Bitcoin confirm there is a high demand for this coin. The hash-rate has been running in a range between the mid-60% to high 70% level over the past year or so and just ticked higher within the range. BTC dominance of the market fell to about 60% over the past month or two but jumped to 67% with this weekend’s selloff. In terms of hash-rate, the hash-rate is tickling a record high proving the attraction BTC still has for the mining community. The downside is that much of the hash-rate has become centralized in large mining communities, something no one really wants to happen.
The Technical Outlook Is Still Bullish, Pre-Halving
The technical outlook is still bullish, pre-halving, so I am optimistic we will at least see the coin drift higher in the near-term. The sell-off we just saw sent price action down to support but support held and bounce is forming. The risk now is that resistance is still present and there is really no way to know what will happen after the halving. A surge in price may be met with intense selling, we’ll just have to wait and see. Exciting!