• An analyst has predicted that Bitcoin prices may rise above the current resistance level at $23,800 to $25,500 before dumping below immediate support lines towards $20,000, or worse.
• This prediction is based on the observation that when Bitcoin hash rate records new highs, coin prices tend to retrace as the upside momentum fades.
• According to the analyst, peaking Bitcoin hash rates can diverge with prices, impacting coin valuation.
An analyst has recently made a bold prediction regarding Bitcoin prices in the near future. His prediction is based on data gathered from CryptoQuant, which shows a direct correlation between the Bitcoin hash rate and coin prices. Whenever the Bitcoin hash rate records new highs, coin prices tend to dip as the upwards momentum fades.
The analyst believes that prices may rise above the current resistance level at $23,800 to $25,500 before dropping below immediate support lines towards $20,000, or worse. To support his prediction, the analyst cites the fact that whenever the Bitcoin hash rate increases, more users and mining farms have an incentive to power on their rigs, further pushing up the hash rate. This, however, has the potential to lead to liquidations, which would ultimately unwind mining activity and pull down prices.
On January 26, the Bitcoin hash rate increased to 305 EH/s, a new all-time high. At the current pace, a new level will likely be registered if BTC prices continue to pump. The analyst believes that while there is a correlation between the spot BTC price and hash rate, the opposite could be true. He is convinced that peaking Bitcoin hash rates can diverge with prices, impacting coin valuation.
The analyst believes that investors should be aware of the correlation between the hash rate and the price of Bitcoin, as it could ultimately lead to a decrease in prices. He believes that investors should exercise caution when investing, as the market can be unpredictable. To this end, investors should always do their own research and use the data available to make informed decisions.