3 Fundamental Reasons Analysts Remain Bullish After Bitcoin Dips Below $9,000

This Saturday, Bitcoin finally decisively fell below $9,000, hitting a new low in more than a week. This move closed tens of millions of dollars worth of Bitcoin futures long positions and also shook the bulls' upward expectations.

However, many analysts remain fundamentally optimistic, pointing to several trends that suggest Bitcoin still has bullish fundamentals. Some of these trends are listed below.

Miners continue to push up the Bitcoin network’s hash rate

The Bitcoin network’s hash rate has dropped after the Bitcoin network’s block reward was halved in May. This “halving” event resulted in a 50% reduction in miners’ revenue. As a result, many small-scale miners have been on the verge of being forced to shut down.

Financial podcaster Preston Pysh wrote after the halving event: “During the 2016 halving, the price of Bitcoin went sideways for nine days, then dropped 28%, taking 100 days to return to the pre-halving price. Be prepared for efficiency cleanups and difficulty adjustments, as the protocol has seats for all passengers.”

However, miners were quickly able to recover thanks to China’s summer rainy season and new mining equipment. CoinMetrics reported earlier this month that the Bitcoin network’s hash rate is now back to pre-halving levels.

This gave rise to Hash ribbon, which, in its most basic sense, can be thought of as a calculation tool that combines Bitcoin’s hash rate and mining difficulty to determine specific time periods when it would be most profitable to buy the digital currency.

Digital asset manager Charles Edwards wrote on the hash rate-based indicator: “A recovery in hash rate looks like it could happen next week… A Hash Ribbon buy signal would also require price momentum to improve from here, so it could take longer.”

Bitcoin network hash ribbon icon Charles Edwards

Notably, he said in December 2019: “Hash Ribbons are important because they historically flip bulls before bull rallies. Hash Ribbon buy confirmed. This is the 10th time these conditions have been met for the Bitcoin network. It is likely that we will never see BTC below $6,000 again. All other cases have had an average gain to cycle peak of +5,000%. Now is the time to buy Bitcoin, never sell.”

Bitcoin on-chain indicators are more optimistic than ever