Bitcoin trading low on the New Year

The crypto market cap hasn’t improved much this past week, dropping in activity since the Christmas weekend. Around $2 billion has exited the market in the last 24 hours. Its total value is currently sitting at $125.7 billion on a volume of $12.6 billion.

Bitcoin and other cryptocurrencies drifted lower on Tuesday, putting a stop to the latest mini recovery attempt.

Bitcoin fell below $3,700 on most major exchanges. Trade volumes surpassed $5.7 billion at the end of last week as prices came back above $4,000 for a brief period of time.

However, volumes have since declined by 30% to $4 billion.

Most of the top 20 cryptocurrencies were trading slightly lower through the day, with Bitcoin dropping about 2% to $3,700 levels.

XRP dropped 1% to $0.35, extending its seven-day slide to about 5%. Ethereum, the second-largest cryptocurrency by market cap, consolidated its position, although it is down from $137 to $135.

IOTA, Cardano, and Tron were all down as well, while Bitcoin Cash and Bitcoin SV were the only two projects to avoid losses.

Will the difficulty adjustment help out?

For the first time since October, Bitcoin’s mining difficulty has adjusted higher, a sign that miners are deploying more hash power into the network, making it harder to mine Bitcoin. Mining difficulty rose 3% last week after plunging over 30% during the previous three-month stretch.

At the same time, the network’s hash rate has reversed its decline following a prolonged downtrend.

It increased 35% in December to well over 43,000,000 TH/s, still below the August peak of 62,000,000 TH/s.

The combined market cap of all cryptocurrencies fell to a low of around $100 billion before staging a recovery in the latter half of December, which could be due to Bitcoin’s mining difficulty adjusting lower in the fourth quarter following the sudden collapse in price that triggered a mass selloff.

If we continue to see more miners, positive pressure could lead to an increase in Bitcoin price, as more miners means more people securing the network, as well as a more distributed network of users.

Of course, the above argument would only be valid in the long term, as we could see a sudden drop in price driven by higher competition.

Stay tuned.