Bitcoin has embarked on a strong recovery in recent weeks. The $3,700 lows seen in mid-March are now a distant memory as the top crypto sits comfortably above $9,500. While its performance has been nothing short of stunning, BTC has been unable to obliterate the heavy resistance at $10K.
However, the CEO and co-founder of Blockware Solutions, Matt D’Souza, believes a perfect storm is brewing for the price of bitcoin as two key factors unravel and could fuel the asset’s momentum past $10K. Souza expects bitcoin to test the $10.5K level in the near term.
Bitcoin’s Hashrate Has Dropped 30%+ And It’s Bullish
In a Twitter thread on May 18, Souza opined that Bitcoin’s hashrate has dropped by over 30% since the halving on May 11 as a result of miners with outdated equipment shutting down their operations due to the reduced revenues.
With the rewards halved to 6.25 BTC, very few miners are still profitable at any mining difficulty level. But according to Matt D’Souza -who also doubles as the CEO of Blockware Mining-, this miner capitulation is incredibly bullish for BTC. This is because the newly minted bitcoins are now getting allocated to the remaining miners who are efficient and can hold the coins. In fact, Souza says this creates a “more fertile environment” for BTC to surge.
Matt D’Souza further noted that should the hashrate remain at the current levels and the block times constant, the mining difficulty could adjust approximately 13% between now and the next epoch. With this adjustment, miners are likely to receive some margin relief.
Perfect Storm Brewing For Bitcoin As Narrative For “Hard Money” Grows Strong
According to Souza, the only thing that matters is supply and demand. For the traditional stock market, it was quantitative easing and money printing that drove the prices up from 2009 to 2019. The past eight weeks have not been any different as the Federal Reserve triggered the equities market rally.
With bitcoin, the increasing global macro weakness and the Fed pumping trillions into the economy is essentially brewing a perfect storm for the flagship crypto, Souza asserted. Bitcoin is a deflationary asset with a fixed supply, making it the epitome of the classic “hard money” and hedge funds, billionaires, and retail investors are all recognizing this fact and purchasing the crypto-asset.
Souza’s logic is right on point. The Federal Reserve has been on a money printing spree in light of the coronavirus pandemic. Fed’s balance sheet recently ballooned past $6.93 trillion for the first time in history, up by $2.6 trillion over just the last two months. This inadvertently presents a compelling case for bitcoin which is one of the scarcest assets in the world and is not subject to the whims of central banks.
BTC Primed To Shatter $10,000, $10,500
Matt D’Souza further stated that the pioneer cryptocurrency looks poised to push past the resistance at the $10,000 level and test the elusive $10,522 mark in the near future. Souza believes such a strong upward move would help prevent more miners from leaving the network.
Moreover, he thinks 2020 could be “amazing” for bitcoin if it can permanently detach from the US stock market and have investors treating it as digital gold.
It should be noted that Souza is not the only market expert who thinks bitcoin could push past $10K soon. Jason A. Williams, a co-founder at digital assets fund Morgan Creek Digital sees BTC hitting $10,000 by the end of today. BTC is exchanging hands at $9,625.94 at press time, down 0.54% in the last 24 hours.