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Bitcoin FOMO Pushing Price Higher to $8,860 Amidst an ‘Epic’ Difficulty Adjustment

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  • Bitcoin makes the best start of the year since 2020 with over 19% gains YTD
  • Trader calls a “classic bull exhaustion move,” another one says just FOMO driven
  • Bitcoin difficulty to increase by about 9% to reach ATH at 15 trillion
  • Strong mining activity and miners HODLing will push price higher but unabated increase in hash rate not good for the price

In another bullish explosion, BTC price has charged through $8,800. On Bitstamp, the price climbed as high as $8,863.

In 2020, to date, BTC has recorded gains of 19.20%, which is the best start of the year since 2012. Meanwhile, the trading volume on top ten exchanges with real volume is surpassing $2 billion.

It’s not only the BTC price that is surging, but altcoins are also soaring but much higher with BSV in the lead registering 90% gains. EOS, Dash, and ETC are also seeing sound gains of over 20%.

The market, however, is not feeling good about this move as veteran trader Peter Bradt says this is FOMO (Fear of Missing Out) driven. Trader CryptoWolrd also feels weak hands are feeling the FOMO here.

Trader Majin meanwhile says, “Blow-off top into rekt. Classic bull exhaustion move. rip in advance.”

Bitcoin Difficulty to Climb to an ATH of 15 trillion

This move came amidst one of the biggest Bitcoin difficulty adjustments of as much as about 9%. The difficulty of the Bitcoin network adjusts every 2,016 blocks based on how difficult it was to mine the previous block.

The difficulty is the number of hashes taken to find a solution below the global block difficulty target. If finding block is easy, miners will overproduce and if too difficult, no one would be able to mine the lock.

The design of Bitcoin’s difficulty is such that it adjusts itself based on the market changes. From Jan. 2 to Jan. 13, the difficulty was set at 13.79 trillion, about the same level as in November 2019, which would see an increase of about 8.9%.

Coin Metric also notes that this increase will take the difficulty to a new all-time high at approx. 15 trillion. This it notes, “is due to the implied hash rate of Bitcoin maintaining ATH levels since Jan 1.”

Bullish or Bearish

Bitcoin’s hash rate also hit an ATH at 117.15 Th/s on Jan. 5 and is currently at 104.9 Th/s. The increase in difficulty and hash rate shows that mining continues to increase.

Given that, after Bitcoin halving in May 2020, about 4 months away, miners’ reward will be cut down into half, BTC miners would want to keep on mining and earn 12.5 BTC than the upcoming 6.25 coins.

With so much activity going on the Bitcoin network, the demand for available coins has risen. But the supply is falling short of filing that up. This is leading the price higher.

If miners also HODL their coins in anticipation of the halving and increase in prices, it could further pump prices.

However, if the hash rate continues to rise, this unabated increase could cause miners to capitulate.

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