Just 2 weeks ago, both the crypto and the stock market plummeted to historically low levels. However, Bitcoin and some altcoins have been able to recover quite nicely, in fact, Bitcoin is currently trading at $6,628, an 80% price increase from the low at $3,782.
The bulls were able to set a daily uptrend and they are now looking to break the $7,000 level while the traditional stock market continues plummeting. U.S. Congressional lawmakers have been forced to come up with a $2 trillion stimulus bill to respond to the coronavirus pandemic. The bill hasn’t passed just yet but it’s close to being finished and it seems the crypto market is already reacting to it.
What is Bitcoin’s Difficulty Adjustment
Bitcoin is designed to adjust its difficulty every 2016 blocks or around 2 weeks. Yesterday, Bitcoin went through yet another planned difficulty adjustment which made the difficulty drop about 16% which basically means that Bitcoin mining is more profitable.
According to Matt D’Souza, hedge fund manager and CEO at Blockware Solutions, Bitcoin tends to react positively to extreme difficulty reductions but only in the long-term. In the last 2 years, Bitcoin has seen 2 other notable difficulty reductions, both in 2018, the first one was followed by a 41.52% price increase over the course of 6 months and the second a staggering 106%.
This seems to indicate that Bitcoin is about to experience a similar uptrend and could easily reach $10,000 again.
Unfortunately, there are a lot of variables that can affect Bitcoin and the crypto market tremendously right now. The recent Coronavirus outbreak is definitely the main factor in the recent economic collapse and could be a deciding factor in Bitcoin’s price in the near future. Even if all trading indicators and fundamentals are in favor of Bitcoin, the global economic situation will have a heavier impact on Bitcoin than anything else.
If the cryptocurrency market can keep up with the recent bounce and continues outperforming traditional markets, the argument about Bitcoin being a safe-haven comes into play again. Gold, for instance, has been weaker than Bitcoin even though its price has been increasing for the past week.