Markets
Bitcoin Fundamentals Remain Strong Despite Market Volatility: Bitfinex
Although the crypto market is far from its March peak, analysts say the fundamentals of the Bitcoin network remain strong.
According to the latest Bitfinex Alpha report,Bitcoin’s fundamental strength is highlighted by key factors such as strong long-term holders and falling mining difficulties. These factors indicate that the network is positioned for future value appreciation.
Bitcoin fundamentals are strong
On-chain data indicates that long-term holders are not selling their bitcoins (BTC) but have been holding them for two weeks. Analysts said this cohort of investors has recently activity reflects their strategic positioning for potential entry points at market lows.
Conversely, short-term holders continue to take profits and increase selling pressure. Analysts revealed that this could be a sign of panic and a shift of liquidity towards altcoins, likely to reverse the price rise if not supported by long-term buying by investors. If this market dynamic persists, it would be safe to assume that the near-term bottom is reached and Bitcoin’s current multi-month range could be headed higher.
These developments come as mining difficulties decreases by 6%, its biggest drop since December 2022. Difficulty measures the number of hashes that must be generated to validate a Bitcoin block and automatically adjusts every two weeks, i.e. 2,016 blocks.
The reduction in mining difficulty indicates that the number of Bitcoin miners has decreased and it is less difficult to validate new blocks.
“This reduction in competition is beneficial to remaining miners, as a six percent decrease in difficulty translates into an approximately six percent increase in Bitcoin revenue for the same level of computational effort,” they said. said Bitfinex analysts.
The crypto market in turmoil
Additionally, Bitcoin has recently treaty its billionth transaction, highlighting significant activity on the network. On May 6, when Bitcoin reached this milestone, more than 625,000 transactions were executed on the network, indicating the health of the blockchain and its adoption as a digital asset.
The recent increase in Bitcoin activity over the past year can be attributed to the launch of new protocols such as Ordinals and Runes and the BTC exchange-traded fund spot market, which have boosted network usage .
Despite the growth and development of Bitcoin, BTC is currently struggling to remain stable above the $63,000 level due to negative economic indicators from the United States. At the time of writing, the asset was down about 2% in the last 24 hours and was trading below $61,600.