Just a couple of days ago, Bitcoin’s price plunged to $8,000, dropping $1,500 in less than an hour. This marked a decrease of around 14% and had quite few people worrying whether the bull run of 2019 had reversed. A closer look at the state of the network and the long-term price trend, however, suggests that everything is just fine.
While the recent drop was significant, especially given the fact that it came after the underwhelming launch of Bakkt, certain network metrics indicate that everything is actually fine.
First things first: the 365-day moving average of the number of on-chain transactions has been increasing over the years and has reached an all-time high at the time of this writing.
Another thing to consider is Bitcoin’s inflation rate. Perhaps one of the best things about it is that it’s baked into the cryptocurrency’s protocol. The following chart illustrates that the inflation rate has been decreasing progressively over the years.
As seen on the chart, it’s currently around 3.7%, which is exactly as intended. Following the 2020 Bitcoin Halving, the inflation rate will drop to 1.8%.
The hash rate has also been increasing substantially, and despite a short-term drop which happened around the time of the price crash, it is again back on track and is now more than 90 quintillion hashes per second. This demonstrates the network’s security.
So, back to the main point – Bitcoin’s price. It’s true that the past few months were rather turbulent and that we saw Bitcoin’s price fall from $14,000 to around $8,400.
However, looking at the bigger picture, Bitcoin is still substantially up in the past year.
It started the year trading at around $3,700, which means that so far, it has increased upwards of 130%.
In other words, while it’s definitely important to note short-term fluctuations, regardless of their direction, it’s also paramount to keep the bigger picture in mind. Bitcoin’s network looks better than ever, and there have been many major developments. Heck, even banks are starting to use crypto. Hence, the fundamentals are in place, and with the Bitcoin Halving just a few months away, it will be interesting to see where the price goes from here.
