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Bitcoin Hash Rate near ATHs while the BTC price at two year lows under $17000!

Key takeaways:

  • Bitcoin hash rate has maintained the status quo over the past week.
  • Bitcoin Fear & Greed Index at 20 – hinting at extreme fear in the market.
  • Bitcoin market cap sustained over the past week.
  • Bitcoin volatility index sees a major fall.
  • Three out of four major Bitcoin futures markets are running negative funding rates.
  • 51% of BTC holders are now in loss!

Bitcoin – the largest crypto by market capitalization in the crypto market is well known for many other things. The grandfather of cryptos, which has the largest trading volumes in the market too. According to CoinMarketCap, Bitcoin’s 24 hour trading volumes stand at about $32 billion as of writing! To understand the scale, Ethereum, which is the second largest crypto by market cap has a 24-hour trading volume of about $11 billion as of writing. The only other crypto that has a trading volume above Bitcoin is Tether (USDT) – which is a stablecoin used to trade in various cryptos, hence doesn’t really qualify.

Now that we know Bitcoin is the most traded crypto out there, let’s take a look at some of the broader indications that you can use to take your first trade in Bitcoin too.

Bitcoin hash rate maintains status quo

BTC Hashrate | Source: Blockchain.com/explorer

As is evident from the chart above, Bitcoin daily hashrate chart has been on a steady upward trend ever since the beginning of the year – despite the raging bear market that ensued in the same timeframe. While Bitcoin price has fallen all the way from around $60,000 to under $17,000 as of writing, Bitcoin daily hashrate has climbed steadily going from around 180 million terahashes per second to nearly 280 million terahashes per second. But as of writing, the past week has maintained status quo in terms of hash rates ranging around 260 million terahashes per second.

Now why is Bitcoin hashrate important? For any proof-of-work (PoW) based blockchain network, hashrate essentially depicts how secure a particular network is and how many miners are there on the network, continuously competing to secure, complete and add the next block to the blockchain.

Bitcoin Fear & Greed Index at 20

The Bitcoin Fear & Greed Index has slipped into the extreme fear territory over the past week, especially in the last few days thanks to the FTT token crash and the FUD around FTX crypto exchange. This is a multi-factoral crypto market analysis that analyses the sentiments of the market participants. It does so by calculating several metrics including volatility, market momentum, volume and social media sentiment of a particular crypto, in this case, Bitcoin.

Bitcoin Holder Data: Over 50% of holders now in losses

Bitcoin Holder Data | Source: IntoTheBlock

According to data from IntoTheBlock – over 51% (or roughly 24.6 million addresses of the total 47.9 million) of the holders are below their purchase price on their Bitcoin investments. Along with that, about 45% are in the money, which means they are still holding on to some unrealized gains on the books while the remaining 4% are at break-even.

Bitcoin market cap sustained over the week

Bitcoin Market Cap Dominance | Source: Tradingview

Over the past two weeks, amid the recovery in Bitcoin and the broader market in general – we have seen that Bitcoin market cap dominance has been falling steadily. In fact, over the past month, Bitcoin market cap dominance has shed over 4%, going from 42% down to 40.3% – which indicates a 4% fall on the chart.

This means that while Bitcoin price is rising in the current market scenario, the broader market recovery is actually being led by other altcoins who are gaining more in percentage terms than Bitcoin, and eating into its market cap dominance. While this is a slightly bad thing for Bitcoin, it bodes very well for the broader crypto market and signals the oncoming of what is popularly known as an ‘altcoin season’.

Read more: BTC price prediction

Bitcoin Volatility Index

Bitcoin Volatility Index | Source: Tradingview

As we can observe from the chart above, Bitcoin volatility index has been on the downslide for about two months now, which had peaked out when Bitcoin had touched its lowest levels of the year. But it spiked once again the last week, amid the crash in BTC prices, which has fallen from over $21,000 to below $17,000. But the index quickly shed it soon after the FTX collapse died down. Such a jumps are pretty common during BTC price crashes and volatility indices fall back again once the crashes subsides.

Grayscale Bitcoin Trust (GBTC) hits discount hits new record low

GBTC Discount or Premium to NAV | Source: ycharts.com

Amid the currently crash in Bitcoin prices, the shares in Grayscale Investment’s bitcoin trust (GBTC) have hit a record low. Currently as of writing, the GBTC discount to the Net Asset Value (NAV) has touched record lows of over 42.73%, according to data from Yahoo Charts.

Bitcoin perpetual futures funding rates

Bitcoin Perpetual Futures Funding Rates | Source: defirates.com/funding

As of writing, three out of the four futures funding rates on exchanges for Bitcoin is on the negative side, as depicted in the image above – which is a bearish indication, pretty much in line with BTC price action.

Now let’s understand funding rates – a funding rate is essentially an amount of fund paid by traders holding perpetual futures to hold on to their positions. This is enforced by futures exchanges primarily to ensure that futures prices do not fluctuate too much above the actual spot price of the asset. Hence a positive funding rate indicates trading holding long positions are willing to pay extra to hold on to their positions while a negative funding rate means that traders holding short positions are willing to pay to hold on to their contracts.

Read more: Bitcoin Technical Analysis

Conclusion

Thus in conclusion from the above observations, we can say that Bitcoin’s current situation looks very bearish as of now, thanks to the negative funding rates, extreme spike in volatility and a slightly falling hashrate. Extreme fear still persists in the market, but it is mainly still an aftereffect of the bear run that Bitcoin has faced since the beginning of the year. And along with that, its dropping market cap dominance suggests that BTC price action will have slightly less effect on the broader market and thus signal the oncoming of the highly anticipated altcoin season.

Values as on 24 November, 2022.

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