Bitcoin has already begun to demonstrate a "green October", having gone up from a narrow consolidation range of 18,700-19,600. If it succeeds to gain a foothold above the level of 19,600, then the quotes of the main cryptocurrency will open the way to resistance at 20,700.
Meanwhile, reports from cryptanalytic platforms show that optimistic processes have intensified in the market.
Bitcoin supply falls, sell-off risk drops
Leading analytics firm Santiment reports that bitcoin holders have withdrawn tens of thousands of BTC from crypto exchanges in just a day.
It is known from the company's reports that on the last day of September, cryptocurrency exchanges witnessed a mass withdrawal of $683.42 million worth of tokens in BTC, which is the fourth largest figure for the year.
According to Santiment, the dramatic movement of the huge amount of BTC suggests that traders are optimistic about the last quarter of the year for the main cryptocurrency.
"On September 30, 34,723 bitcoins left the exchanges, which may indicate the confidence of traders in the fourth quarter. The last time this amount of BTC left the exchanges was on June 17, when prices jumped 22% over the next four weeks."
Amid hints of trader confidence, Santiment highlights that bitcoin supply across all crypto exchanges has fallen to levels not seen since the peak of the cryptocurrency bear market in 2018. Reducing the supply of BTC on crypto exchanges reduces the risk of a market sell-off.
"Bitcoin supply is leaving the exchanges as traders show new signs that they are happy with their current holdings. For the first time since 2018, there are less than 9% of BTC on exchanges, which is a good guarantee for bulls."
Hash rate on the rise
In parallel, the bitcoin hash rate continues to rise to new all-time highs despite the massive price drop.
Bitcoin hash rate peaked at 258 exahashes per second (EH/s) on October 4, according to Braiins Insights, a data tools and metrics company. Although the price of the main cryptocurrency has decreased by 58% against the US dollar since the beginning of the year, the mining speed has increased by 43%.
Analysts note that "the hash rate, which has reached another all-time high, shows that miners are optimistic about the future prospects of the main cryptocurrency." However, the current macroeconomic environment may pose a challenge as "the current time is not so rosy for bitcoin miners."
"Bitcoin continues to trade in this tight range between $19,000-$20,000, and this recent increase in hash rate will lead to a sharp increase in mining difficulty, which means a further reduction in miner margins," the analysts explain.
Analysts at mining firm Upstream Data summed up market sentiment by saying that the increase in hash rate could be the result of "XP going online." The Antminer S19 XP is the latest model from Bitmain, one of the world's most popular bitcoin mining equipment providers.
The number of hashes produced per second is commonly referred to as the hash rate. Hash rate is a critical indicator of security and also something that many BTC miners look for.
Simply put, the more hashing—or computing power—the network produces, the greater the overall security of bitcoin. As a result, the main cryptocurrency is more resistant to attacks, the most common of which is known as a 51% attack.
Complex adjustment determines the speed of solving blocks. It fluctuates roughly every two weeks and is expected to increase on October 10th based on hash rate growth. In 2022, the difficulty adjustment has risen steadily - meaning blocks are getting harder to solve on average - after the first drop in March 2022.
Overall, even though the price of bitcoin remains below $20,000, more and more miners are finding value in supporting the network.
James Check, an analyst at Glassnode, explained the situation this way: "With hash rates hitting new all-time highs again, despite all promises to the contrary, it looks like bitcoin is still alive."
