Bitcoin in 2 Charts: Time to Sell?

Compared to a gloomy 2022, Bitcoin (CRYPTO: BTC) is falling apart in 2023. Since the start of the new year, the world’s most valuable cryptocurrency is up more than 70% year-to-date. While this jump in price is refreshing, especially when you consider that it has achieved this in less than four months, Bitcoin is still nearly 60% off its all-time high.

This dichotomy between a recent rally but still well off previous highs makes it somewhat difficult to evaluate Bitcoin’s current position. However, there are two charts that can provide some perspective and shed light on whether the cryptocurrency is a buy or a sell today.

Hash rate continues to rise

One of the primary investment theses for Bitcoin is that it is one of the most decentralized and highly secure networks in the world. Even if this is true, how can we be sure? Fortunately, there is a metric that quantifies this decentralization and security.

This statistic, known as hash rate, measures the amount of computational power required to mine a block on the Bitcoin blockchain. As the hash rate increases, it becomes more difficult to mine Bitcoin blocks, thus increasing the security and decentralization of the network. There are quite a few dynamics at play when it comes to hash rate, but what investors should know is that today Bitcoin’s hash rate is just below its all-time high.

Image source: TradingView.

While Bitcoin’s price has gone through several bear markets and crypto winters, there has been a clear trend of the hashrate increasing over time, regardless of market conditions. It is difficult to emphasize how important this is.

As long as the hash rate continues on this upward trend, the premise of investing in Bitcoin remains intact.

Opportunities abound as prices remain discounted

Although Bitcoin’s hash rate is at record levels, the price remains well short of the November 2021 all-time high of nearly $69,000. The cycle of Bitcoin hitting seemingly impossible new highs every few years is a recurring theme, but so is its subsequent dramatic falls from these levels.

Based on the chart below, we can look at Bitcoin’s current status in these boom-and-bust cycles that have become so common.

Image source: TradingView.

Today, as mentioned, Bitcoin is far from an all-time high. But instead of just showing the price, this chart shows the percentage decline from Bitcoin’s previous all-time high. While we’re not trying to time the market, imagine you bought Bitcoin every time it fell into these deep lows. It is in these deep valleys where the most lucrative returns are to be found.

While hindsight is always 20/20, today Bitcoin is again at a low point in this chart. While that may sound like timing the market, the true goal here is to find occasions where Bitcoin’s valuation doesn’t match its value and long-term potential, creating a rare buying opportunity.

The combination of Bitcoin’s low price and the hash rate that is now close to an all-time high is probably the only argument needed to justify an investment in the cryptocurrency today. While we can never be certain, if the next bull market were to come, those who invest today may be poised to reap the biggest gains.