BT Daily News: Not a minor adjustment: Bitcoin mining difficulty soars 13.5% to new ATH

1. Bitcoin mining difficulty soars 13.5% to new ATH

It’s a new all-time high–for Bitcoin mining difficulty. Hot on the heels of the Bitcoin hash rate hitting new highs, the difficulty adjustment, or the complexity that miners must overcome to solve valid blocks, has increased by 13.55%.
 
For Mark Morton, CEO of Scilling Digital Mining — a Bitcoin mining company based in Ireland — “The next difficulty adjustment suggests that miners are still finding sufficient profit margins to turn on new machines and are likely capitalizing on plummeting machine prices.”
 
Morton also mentioned that the soaring difficulty and hash rate are “very positive for the security of the Bitcoin network. We are witnessing network security skyrocket even despite the drawdown in Bitcoin price.”

2. Volatility pointers say rare price action due

Despite the added potential for fakeouts thanks to reduced liquidity, the “out-of-hours” status quo remained similar to that of previous days — limited movement within a familiar trading range.

The weekly candle close, coming in at just above $19,400, was also no surprise, although Bitcoin’s highest since mid-September.

On one-week timeframes, BTC/USD thus continued to form a cluster of candles in which the market hardly moved up or down at all — a classic sign that volatility will result.

That breakout event has already been forecast on lower timeframes, these coming true on Friday as United States jobs data sparked a brief sell-off, which cost bulls the $20,000 mark. Now, analysts are looking for a repeat performance over more significant period.3. September CPI inbound in hectic macro week

3. September CPI inbound in hectic macro week

Turning to the wider economy, there are more than enough potential BTC price triggers in the making this week. Economic data releases will come thick and fast from Oct. 12 onward, and with tensions reaching new levels in the Russia-Ukraine war, shocks to commodities markets remain as a curveball.

“This upcoming week is gonna be a fun one: PPI, FOMC minutes, CPI, Initial jobless claims, and retail sales,” Clemente summarized.
 
Of particular interest, he added, was the U.S. Consumer Price Index (CPI) print for September, due on Oct. 13, which will form a major reference point for the Federal Reserve as it approaches a fresh interest rate hike next month. While the direction of CPI inflation based on prior prints is likely less of a mystery, each print tends to produce unusual market volatility characterized by “fakeouts” both up and down.

Should this month repeat the trend, speculative trades both long and short could wind up liquidated en masse.4. Difficulty prepares biggest uptick since August 2021

Internal developments in Bitcoin could form the basis for a surge in confidence as the week begins. According to current estimates, Bitcoin’s mining difficulty is due to add a giant 13% on Oct. 10 — its biggest since August 2021 — and could easily enough take it to new all-time highs.

4. Difficulty prepares biggest uptick since August 2021

The numbers make for surprising reading. Such an increase suggests that miner competition is increasing in line with increasing network participation — yet BTC price action is still near two-year lows.

Miners will already have extremely slim profit margins, with production costs for many likely very near the current spot price. Increasing difficulty and thus financial commitments, therefore, should squeeze profitability further, raising the risk of miner capitulations.

“Bitcoin miners just won’t stop,” analyst Dylan LeClair wrote about the difficulty estimate last week.5. Time for a BTC price bottom?

5. Time for a BTC price bottom?

Back to eyeing when BTC/USD could bottom in this bear market, Charles Edwards, CEO of asset manager Capriole, looked to cycles gone by. In addition to Clemente this weekend, Edwards noted that in both 2018 and 2014, Bitcoin put in a macro bottom within a set period following its prior new all-time high.

The time for history to repeat itself is here, and is only three months long.

“We are in the 90 day window where the last 2 Bitcoin cycles bottomed,” he confirmed, referencing Clemente’s chart comparing distances between Bitcoin all-time highs and subsequent macro lows.

The low could still be far off in terms of price, however. At $19,400, BTC/USD is 71% below its last peak — less by comparison than in 2018. Even June’s low of $17,600 represents a 74.5% drawdown — not enough to match prior cycles.

6. Sentiment data copies bears gone by

Looking at the will of the herd, it seems that it is very much “business as usual” in this Bitcoin bear market.

According to the popular market gauge, the Crypto Fear & Greed Index, “extreme fear” still reigns supreme in crypto — as it has done for much of 2022.

With a score of 22/100, Fear & Greed has been in its lowest zone for multiple weeks. Earlier in the year, it saw its longest-ever “extreme greed” stint at more than two months.