According to CryptoPotato, despite the crypto market's distance from its March peak, Bitcoin's foundational strength is still robust. This strength is highlighted by key factors such as the persistence of long-term holders and a decrease in mining difficulty, suggesting the network is well-positioned for future value appreciation.
On-chain data shows that long-term holders have been retaining their bitcoins (BTC) for the past two weeks, indicating strategic positioning for potential entry points at market lows. In contrast, short-term holders are still realizing profits and increasing selling pressure. This could be a sign of panic and a liquidity shift towards altcoins, potentially reversing price rallies if not supported by long-term investor purchases. If these market dynamics continue, it could be inferred that the short-term bottom is in and Bitcoin's current multi-month range could trend upwards.
In addition, Bitcoin's mining difficulty has decreased by 6%, the largest drop since December 2022. This difficulty, which measures the number of hashes needed to validate a Bitcoin block, adjusts automatically every two weeks or 2,016 blocks. The decrease in mining difficulty suggests a decline in the number of Bitcoin miners, making it less challenging to validate new blocks. This reduction in competition benefits the remaining miners, as a 6% decrease in difficulty equates to roughly a 6% increase in Bitcoin earnings for the same computational effort.
Furthermore, Bitcoin recently processed its one billionth transaction, highlighting significant activity on the network. On May 6, when Bitcoin reached this milestone, over 625,000 transactions were executed on the network, demonstrating the blockchain's health and adoption as a digital asset. The recent increase in Bitcoin activity over the past year can be attributed to the introduction of new protocols like Ordinals and Runes and the spot BTC exchange-traded funds market, which has increased the network's usage.
However, despite Bitcoin's growth and development, BTC is currently struggling to maintain stability above the $63,000 level due to negative economic indicators from the United States. At the time of writing, the asset had fallen approximately 2% in the past 24 hours and was trading below $61,600.