- Bitcoin’s recovery stalled as the coin failed to move above $7,000.
- The fundamentals imply that Bitcoin may be on the verge of a long-term bullish trend.
Bitcoin has barely moved in recent 24 hours. The first digital asset is changing hands at $6,600 with no clear short-term direction. BTC/USD hit the intraday high at $6,795, but the upside momentum faded away quickly. According to the data provided by Intotheblock, there is a cluster of BTC addresses that has a break-even point in the range from $6,600 to $6,800, which makes this area particularly tough for the bulls.
Bitcoin mining difficulty spikes
Bitcoin’s mining difficulty dropped by nearly 16%, which is the second-largest decrease on record. Mining difficulty is one of the essential parameters of the Bitcoin network. It shows how difficult it is to perform mathematical calculations to find a new block and get the reward. The difficulty is adjusted every 2016 blocks depending on the average time spent on discovering the previous blocks.
The sharp decrease of this parameter means that some miners took their equipment offline, which is also confirmed by the collapse of the hash rate. On March 25, it dripped to 75.7 EH/s, down 44 percent from where it was two weeks ago. Due to the sharp hash rate decrease, a block discovery took over 10 minutes.
Small miners dropped out of the game as after a sharp BTC collapse on March 12, they were no longer breaking even. However, the enormous mining difficulty adjustment, which will happen on Friday, around 7:00 GMT, may provide them with much-needed relief.
If history is any guide, such events lead to a substantial price increase of the first digital asset. Thus, the 15% drop of difficulty on Dec. 3, 2018, resulted in BTC/USD rally. The coin gained more than 300% in the first half of 2019. A similar trend was registered after massive reductions in 2011 and 2012.
BTC/USD: Technical picture
From the technical point of view, $7,000 remains the key resistance to be taken out. Once it is out of the way, the recovery may gain traction with the next focus on $8,200-$8,400. This resistance area is created by a confluence of strong technical indicators, including SMA100, SMA200 and SMA50 daily and 23.6% Fibo retracement for the downside move from June 2019 high to December 2019 low.
On the downside, the vital support is created by psychological $6,000. A sustainable move below this level will attract speculative sellers to the market and push the price to SMA200 weekly at $5,500. This area may slow down the sell-off and trigger a recovery.
BTC/USD daily chart