This Statistic Proves Bitcoin Is Not a Bubble
Bitcoin’s trading range continued to narrow on Saturday, the latest sign of consolidation following a more than 10% correction earlier in the week.
While bitcoin’s short-term trajectory remains uncertain, one statistic should put to rest any concern that the largest cryptocurrency is a manipulative bubble (more on that below).
The bitcoin price hovered within a $130 range on Saturday, according to Bitstamp data. The BTC/USD exchange rate was last seen hovering just north of $9,600, up 0.3%. Immediate resistance is likely found at $9,680, the 100-day exponential moving average.
Bitcoin plunged more than 7% on Wednesday, a move that dragged the relative strength index (RSI) below 40 for the first time since February. When the RSI approaches 30, an asset is generally believed to be oversold and due for a correction.
Trading in BTC has fallen sharply over the past 48 hours. Spot trading on Saturday fell to around $440 million, according to Bitwise, which tracks the data of ten verified exchanges.
At current price levels, the Bitcoin network has a value of $172.2 billion, which accounts for 69.2% of the total cryptocurrency market.
Bitcoin’s Most Bullish Statistic
The idea that ‘bitcoin isn’t backed by anything’ is one of the biggest arguments made against owning the virtual currency. But according to Rhett Cryptography, bitcoin miners spend a whopping $4 billion per year maintaining the world’s largest cryptocurrency network.
Charlie Shrem called this the “most bullish fucking statistic” on bitcoin – one that should put to rest any assertion that bitcoin is merely a bubble being propagated by whales who happened to get in on the market very early.
Most bullish fucking statistic I've ever seen.
Every year, miners spend $4 BILLION Dollars securing the network.
Not burning. Transferring.
"energy can neither be created nor destroyed; energy can only be transferred or changed from one form to another"
Laws of physics. https://t.co/5ssNwwkj3w
— Charlie Shrem (@CharlieShrem) August 30, 2019
Although proof-of-work mining is controversial due to its alleged environmental impact, there’s no denying that miners have skin in the game. The same cannot be said for central banks, which have given financial institutions free reign to expand the money supply through ultra-low interest rates.
On Friday, Coin Metrics reported that bitcoin mining revenue has topped $14 billion, with $9 billion of that total accrued in the last two years. Mining bitcoin is still profitable despite the unprecedented surge in hash rate, which makes the process less lucrative. A higher hash rate means miners are deploying higher levels of computational processing power to validate blocks. They receive 12.5 BTC for every block mined. That number will fall to 6.25 BTC following the next halving event in May 2020.
Coin Metrics says mining revenue will break $15 billion in early 2020, just before the next halving event.
Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock. Chart via TradingView.