With the halving approaching and the difficulty of mining rising, is Bitcoin about to usher in a new round of rebound?

The trend of Bitcoin in the past week is still worth paying attention to. In the middle of the week, the price of Bitcoin once broke through the resistance level of $7,200 and seemed to be about to hit $8,000. However, near the weekend, the price of Bitcoin suddenly began to fall back and broke through the two support levels of $6,900 and $6,750. Currently, Bitcoin fluctuates around $6,700.

So, does Bitcoin's performance over the past week indicate that interest in Bitcoin is waning, or is it just a normal pullback that is building up momentum for the next breakout?

We found that Bitcoin is still within the downward channel that has been formed since July 2019. The last time Bitcoin broke through this channel was in October last year, when the price of Bitcoin rose from US$8,750 to US$10,500, but then fell back into the channel.

Currently, Bitcoin is once again above this channel, and a new upward channel is forming. However, at present, Bitcoin first needs to stand above $7,100 and this level turns into support before history can repeat itself.

We also notice that on Bitcoin’s weekly chart, the MACD indicator looks almost identical to January 14, when Bitcoin also touched the upper side of the descending channel and then rallied from $9,000 to $10,500.

Moreover, before Bitcoin pushed forward to the high point of the year, it also fell back into the downward channel. In addition, another trend worth noting is that the difficulty of Bitcoin mining is about to start to rise.

After the "Black Thursday" on March 12, as the price of Bitcoin plummeted, the difficulty of Bitcoin mining also saw the largest decrease in history, down 16%. However, last week, the difficulty of Bitcoin mining increased by nearly 6%, and there are still 8 days before the next mining difficulty adjustment, and it is expected that the difficulty of Bitcoin mining will increase by 7% again.

So, if we use Bitcoin’s price action at the start of 2020 as a guide, this could suggest another major price surge for Bitcoin in the coming week.

In addition, Bitcoin Cash completed its "halving" last week, and as a result, the total network computing power (hash rate) of Bitcoin Cash has plummeted. The most likely reason for this is that BCH miners switched their computing power to mine BTC.

As more and more miners switch their computing power to mining Bitcoin, it is reasonable that the difficulty of Bitcoin mining will increase. There are still about 30 days before the Bitcoin halving, and the computing power of the entire Bitcoin network should continue to rise during this period.

If Bitcoin can quickly break through and maintain above $7,100, a strong rebound is likely to occur in the next week. Moreover, with the recovery of mining difficulty and computing power, the price of Bitcoin will hopefully return to $8,000 before the halving.

On the other hand, if Bitcoin has been unable to recapture $7,100, it means that the pullback last weekend may not be enough, and we need to focus on the support of $6,500 next. (Baijiahao)