Why bitcoin recovered to $50,000 after the collapse in May. 5 reasons

CryptoQuant analyst named the factors that helped the price of the main cryptocurrency rose by 50% over the past month.

August 23 morning bitcoin rate on the cryptocurrency exchange Binance exceeded $ 50 thousand for the first time since mid-May. At the moment, quotations of the cryptocurrency reached $50.4 thousand, as of 14:15 MSK, bitcoin is trading at $50.1 thousand. The main cryptocurrency rose in price by 50% over a month.

The analyst of the CryptoQuant service called the reasons, due to which the bitcoin rate began to recover after the collapse in May and exceeded $50 thousand.

CryptoQuant analyst named the factors that helped the price of the main cryptocurrency rose by 50% over the past month.

What was happening with bitcoin

In the middle of April of this year, the price of the main cryptocurrency reached a historic high of $64,800. Since the beginning of the year the growth of the asset was 123%.

In mid-May, there was a collapse of the crypto market, which resulted in the cost of bitcoin per day decreased by more than a third and reached $ 30 thousand for the first time since January. The price of digital coin reached its local minimum on June 22. Then, bitcoin rate fell to $28.8 thousand.

The recovery of quotations began on July 21, when bitcoin increased by 8% per day. The capitalization of the first cryptocurrency increased more than $300 million during the last month and approached $1 trillion for the first time since mid-May.

Reason 1. Hashrate recovery

In June, the bitcoin network’s hash rate fell by more than 50% and reached 65 Eh/s (exaheesh) for the first time since November 2019. This happened when miners began to leave China en masse after the ban on cryptocurrency mining was introduced. Initially, the restrictions were imposed in five provinces, then they were extended to the entire territory of the PRC.

At the end of July, the hash rate of the main cryptocurrency began to recover. As of August 23, the figure is 126 Eh/s, according to the BitInfoCharts service. Over the last month, bitcoin’s hashrate has increased by 32%.

Reason 2. Bitcoin sales at a loss

At the end of June, short-term investors sold bitcoins at a loss of $3.83 billion in one week alone. At the same time, long-term holders of the first cryptocurrency recorded a profit of $3.45 billion. The total loss was a record $3.45 billion.

The decline of bitcoin below $30K led to the loss sales of digital coins. Glassnode analysts pointed out that the decline of bitcoin value below this level caused panic among short-term investors and long-term holders of the cryptocurrency.

Reason 3. “Short-squeeze” in the futures market

According to analyst CryptoQuant, from July 21 to July 26 there was a “short-squeeze” in the bitcoin futures market. This term is a mass liquidation of short positions as a result of a sharp rise in the price of the asset, which leads to even greater growth.

A futures is a contract to sell or buy an underlying asset at a predetermined future price.

The price of perpetual bitcoin futures on Binance Futures on the morning of July 26 rose above $48,000, adding 31% overnight.

Reason 4. Mass purchases

After “short-squeeze” in the end of July users of cryptocurrency exchanges began to buy bitcoin and take it out of trading platforms, CryptoQuant analyst says.

This is also confirmed by the data of analytical service Glassnode. Already on July 30, the number of bitcoins on centralized cryptocurrency exchanges fell to the level of 2018, when the value of the main cryptocurrency fell to the mark of $3.2 thousand.

Often, the outflow of funds from cryptocurrency exchanges is associated with active purchases. For example, in the evening of May 19, after bitcoin rate fell by a third in 24 hours, up to $30 thousand, the largest withdrawal of digital coins for the year was recorded. Users withdrew about 175 thousand BTC worth $7 billion to cold wallets at the exchange rate at the time.

Reason 5. Decline in miner sales

Bitcoin miners slowed down sales of mined cryptocurrency and started accumulating it, explained CryptoQuant analyst.

Bitcoin miners managed to earn $971.8 million in July. Last month, miners increased their profits, compared to June, then they received $839 million. The record level of income of miners was recorded in March of this year ($1.75 billion).

Short-term forecast

According to the forecast of analyst CryptoQuant, the cost of bitcoin after the level of $50 thousand will fix at around $51 thousand. After that, the main cryptocurrency will aim at the next target – in the region of $57 thousand.

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The post was written by Crypto Expert John Belford

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