FX.co ★ Technical Analysis of BTC/USD for February 8, 2021

Crypto Industry News:

According to Glassnode, the average hash rate of the Bitcoin blockchain (BTC) - the total processing power devoted to mining - has reached a new all-time record of over 176 EH / s.

The increase in hash rate can be explained by the increase in the price of bitcoin itself. Miners receive BTC as a reward for mining new blocks. The more a coin costs, the higher the miners' income. Therefore, as the price of BTC rises, miners are encouraged to contribute more to the overall computing power of the network.

Another factor is transaction fees - the second revenue stream for miners. Basically, as trading volumes increase - as they tend to increase in bullish periods - transaction fees also rise. Combined with the price of bitcoin, this further increases the profitability of mining.

As CoinGecko data shows, the rise in the BTC price to USD 38,000 coincided with Friday's hash rate jump. Currently, bitcoin costs around $ 38,600, while its network hash rate has dropped below 165 EH / s, which therefore means that 165 quintillion (18 zeros) hashs are computed every second across the Bitcoin network. By comparison, the hash rate of the network was around 120 EH / s in early 2020 - an increase of nearly 50% in just one year.

However, an increase in the hash rate does not accelerate the discovery of new blocks. This is because the speed of one block per 10 minutes is hard-coded into the Bitcoin blockchain and has remained largely the same for the past 12 years.

To maintain this rate, the Bitcoin network automatically adjusts its difficulty on a regular basis. Thus, even if there is a huge surge in computing power, the process of discovering new blocks will just be proportionally more difficult.

Technical Market Outlook:

The BTC/USD pair has made a new local high at the level of $40,924 in form of a Doji candlestick. Nevertheless, the price was rejected from $40,000 and is currently trading around the level of $38,600. If the level of $40,924 is clearly violated, then bulls might rally straight back to the recent local high located at $42,000 and even break higher towards new ATH. Please notice, the momentum on the RSI indicator is strong and positive, so the bulls are doing their best to resume the up trend.

Weekly Pivot Points:

WR3 - $51,306

WR2 - $46,193

WR1 - $42,645

Weekly Pivot - $37,209

WS1 - $34,108

WS2 - $28,930

WS3 - $25,324

Trading Recommendations:

The bulls are still in control of the Bitcoin market, so the up trend continues and the next long term target for Bitcoin is seen at the level of $50,000. Any correction or local pull-back should be used to open the buy orders. This scenario is valid as long as the level of $30,000 is clearly broken.