The price of Bitcoin (BTC) has presented a lot of movement in the last week. After successfully breaking the $ 7,200 resistance on Monday, April 6, all eyes were on the main digital asset to hold $ 7,000 as new support, but as soon as the weekend came, the price fell, finding a new temporary low of $ 6,750.
According to Coinmarketcap, Bitcoin’s market cap is currently $ 129,640,539,024.
So are these spills over the weekend a sign that interest in Bitcoin is declining? Or are they just whales taking advantage of the smaller weekend volume to accumulate before the next big rally?
Daily performance of the crypto market. Source: Coin360.com
Bitcoin’s resistance levels are tested
Daily chart of the BTC / USD pair. Source: TradingView
Bitcoin continues to be in a descending channel that was formed 10 months ago. The last time the king of cryptocurrencies left this channel, he encountered fierce resistance at 5 different levels ranging from $ 8,750 to $ 10,500.
Currently, Bitcoin is once again on this channel, while a new upstream channel is taking shape. From here Bitcoin needs to form support by closing the daily above $ 7,000 for history to start repeating itself, and this is not the only pattern that is repeating this year.
History repeats itself with the MACD
MACD weekly chart for BTC / USD pair. Source: TradingView
The Moving Average Divergence Convergence (MACD) indicator in the weekly time frame looks almost identical to that of January 14, which was when Bitcoin last closed above the descending channel. This resulted in a rise from $ 9,000 to $ 10,500.
However, just like the past few days, Bitcoin fell back into the channel before advancing to the annual high.
At the time this was attributed to the difficulty of mining increasing every 2 weeks, a trend that seems to be returning.
The difficulty of mining increases
BTC mining difficulty. Source: BTC.com
After the Black Thursday event, when the price of Bitcoin dropped 50%, the mining difficulty adjustment fell by almost 16%. This was one of the biggest declines in a single period that Bitcoin had featured.
However, last week the difficulty increased by almost 6% and the next adjustment is already close to 7%. With only 8 days to go, this will most likely end this year’s negative adjustment, does that mean the price will follow?
If price action is taken into account in early 2020, it could suggest that another large price increase will occur in the coming week.
Are the miners who are leaving BCH to mine BTC the ones who are driving the price?
BCH hashrate graph. Source: BITINFOCHARTS
Bitcoin Cash (BCH) had its halving last week, triggering a lackluster 11% price rise before the digital asset slowly returned to its pre-halving price. However, as a result of halving, the hash rate dropped, as can be seen in the graph above.
The most likely reason for this drop is due to the fact that those who mine Bitcoin Cash use the exact same hardware as Bitcoin miners. So when faced with a 50% reduction in profitability, it would make more sense to target your miners to real Bitcoin.
With more miners heading to the Bitcoin network, it would make sense that the difficulty would start to increase. This is something that I hope will continue to occur in the next 30 days before the actual Bitcoin halving.
However, this will also lead to the difficulty of mining BCH plummeting, so this little process is something that will cause very interesting price action in the coming weeks.
If Bitcoin closes above 7,100, dollars will be incredibly bullish for next week. Again, $ 7,200 is the first level of resistance, however $ 7,400 and $ 7,700 are the next two levels that prevent Bitcoin from breaking the $ 8,000 barrier.
With the increasing number of miners increasing the difficulty on the Bitcoin network, a rebound to $ 9,200 is something to be expected before the end of the week.
It still looks like Bitcoin is recovering too soon and this weekend’s withdrawal doesn’t seem to be enough. If the weekly candle closed below $ 7,100, it would first look for $ 6,750 and $ 6,500 as its last support levels before opening a mid-range of $ 5,000 for buyers to step in.
The points of view and opinions expressed here are solely those of @officiallykeith and do not necessarily reflect Cointelegraph’s views. Every investment and trading move involves risk, you must carry out your own research when making a decision.
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