Bitcoin Fundamentals for Q1 and Q2 2019

Introduction

Considering that the Bitcoin technology is not linked to any nation’s economy, it serves as a non-correlated asset and a haven from the uncertainties with traditional economies.  

In a Bloomberg report on June 15, JPMorgan Chase thinks that the Bitcoin market reveals an increase in the participation by institutional investors.

Retail traders and HODLers on different Bitcoin exchanges are not left out in the buying frenzy. Read on as we uncover more fundamental events that are driving the Bitcoin Price.

Bitcoin as a Hedge against Traditional Economic Crisis

The fear of U.S vs. China trade war makes the number one cryptocurrency by market capitalization a haven to hedge against risk, not to mention uncertainties with Brexit, and other unstable economies.

Further analysis of the Bitcoin network reveals the viability of the number one crypto asset.

Bitcoin in the News:

CNBC interview featuring Mike Novogratz, the Galaxy Digital founder, and cryptocurrency supporter

Making reference to Mike Novogratz forecast of Bitcoin trading within the 10,000 USD to 14,000 USD range at the CNBC Squawk box show, and FaceBooks’ entry into the cryptocurrency market, we can only expect an increase in speculative adoption towards that range as the Bitcoin price spiked to a high of 13,764.00 on June 26 ’19 before making a sharp retracement of approximately 20%.

Bitcoin Futures of the CME Group Reports Record Volume in Q2

Alongside the Chicago Board Options Exchange (CBOE), the CME was the first Bitcoin market provider since December ’17.  An all-time record of 33,700 contracts was realized in the second quarter, which surpasses the previous high of 22,500 contracts on April 04.

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Higher Hash Rate:

A higher and increasing hash rate indicates more computing power allocated to securing the BTC network, making a 51% attack an impossible and expensive task by a single entity.

According to data released by Diar, smaller mining pools see a 23-24% growth within Q1 and Q2 of 2019, as well as an increase in On-Chain transaction approaching record high.

The above chart compares the Bitcoin Price to Mining Difficulty (Mean), notice the divergence in August ’18, where the Bitcoin price nose-dive while the mining difficulty increased.

A decline in the Mining Difficulty in November ’18 increased the selling pressure, which consequently sent the Bitcoin price crashing down.

The bearish descent of the Bitcoin mining difficulty ended early Q1 2019, which was followed by price divergence.  As the mining difficulty increased, the Bitcoin price equally increased from the first quarter into the second quarter.

Decline in Transaction Fees

Another fundamental indicator of price growth is the sudden decline in the transaction fee from Q4 ’18 to Q2 April ’19 as illustrated on the above bar chart.

Growth in Bitcoin Lightning Network and Mainstream Adoption

A full node is no longer a requirement for users to experience the Lightning Network

The release of the Bitcoin (BTC) “Blue Wallet” in December ’18, allows users to plug into their hub without the having to set up your Bitcoin node or local lightning node.

Moving forward into February ’19, a browser extension and lightning wallet dubbed tipping were integrated with Twitter, allowing users to tip each other, using Bitcoin (BTC) on social media platforms, operating by the connection with BlueWallet, a Lightning-enabled wallet.

Conclusion

So far, the Bitcoin fundamentals within Q1 and Q2 of 2019 justifies a further increase in the Bitcoin price towards the 20,000 USD mark.

We look forward to exiting our position when the price goes above the difficulty rate, as shown in the above long term overview.