Bitcoin’s Difficulty Adjustment Effect

Since China banned Bitcoin mining, and since the difficulty adjustment dropped -28% on Friday, July 2nd, the pricing structure has looked like a breakout is coming.  Here are two charts below:

We still can see it taking until August for a complete breakout, but Bitcoin could break the $36K resistance line in the above chart this week!  There is more resistance above that in the $40K’s but $36K is the resistance line to break right now.  Can Bitcoin do it?  With the hash rate recovering, now that miners that moved from China are getting online and those miners remaining online (outside of China) are making more money since the difficulty adjustment dropped.  Bitcoin is now poised to make a move.  It could go either way.  Our money is the breakout will be to the upside.  The rest of this blog will examine why we think so.  First off, in Germany, spezialfunds of $415billion will be allowed to be invested in crypto.  This could spread Bitcoin and cryptocurrency investment across Europe, click here to read.
 

For the first time in 9 weeks, inflows of +$63million in investment last week from institutional investors came into Bitcoin.  Institutional investors had been a net negative in weekly investment until then.  GBTC is now up to $30billion in AUM after last weeks gains, click here to view on twitter.
 

Also, Bitcoin has printed higher lows for the last two weeks as demonstrated in the second chart above on this blog.  Patience is required here.  However, we could see Bitcoin getting above $40K by next Monday.  We shall see.  It could break down and keep ranging in the $30K to $40K area.  Historically, a difficulty adjustment of -28% is very bullish and everytime Bitcoin has had a large difficulty adjustment, it has marked a major recovery.  

Last week, we mentioned in a blog that when the whales who actually did sell the first top of this bull run come back, they will usher in the next leg up:

A net positive in inflows from institutional investors last week.  Now, a positive uptick in supply held by entities with a balance of 1K to 10K Bitcoin.  Will the $36K resistance be broken this week??  Stay tuned.  So far the price is still just trending in a symmetrical triangle.  It has to pick a direction soon.  We are waiting patiently, and not selling any Bitcoin of course.  Remember, these prices will look very cheap in a few months.  Is’nt now a good time to buy?

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