3 reasons why today is the perfect opportunity to buy Bitcoin
Bitcoin (BTC 3.09%) is now up more than 60% in 2023 after a brutal 2022, when the price fell more than 64%. Some are calling the recent jump a bull trap in a prolonged bear market, but there is reason to believe that Bitcoin’s best days are ahead.
Although the price is still more than 61% of its all-time high of nearly $69,000 back in 2021, a handful of metrics show that Bitcoin is still in relatively good shape, especially considering the craziness crypto has gone through in the past year.
1. My favorite metric
Potentially the most important statistic that flies under the radar is known as mining difficulty, and it is currently at an all-time high.
This is one of the most valuable indicators of the token’s health, because the higher the mining difficulty, the more decentralized and secure the Bitcoin network becomes. Thanks to an increase in the number of nodes running the Bitcoin code around the world and more powerful mining computers coming online, the difficulty of mining has increased continuously since the crypto’s creation 14 years ago, regardless of price fluctuations and several bear markets.
As this trend continues, it shows that the Bitcoin network is still growing in security and decentralization even in the midst of crypto winter. Personally, I think this is one of the most enticing reasons to invest in Bitcoin today, because investors have the opportunity to buy it while it stays well away from the peaks.
2. Increased block sizes
Besides mining difficulty reaching a new high, another metric recently set a record: block size. Evaluating block size is important because it allows us to see how many transactions are happening on the network and thus measure activity.
This increase in activity is likely due to the rise of ordinals, or Bitcoin-based non-fungible tokens (NFTs), which are digital representations of ownership of art, media and collectibles. Since its introduction in January, more than 150,000 ordinals have been created. As a result, the crypto’s average block size has increased by 20.5%, reaching an all-time high of just 2.5 megabytes.
An increase in block size indicates that there is greater demand for block space; as a result, this increases the fees paid to miners. The more fees generated lead to a higher level of compensation for miners, thus greater incentive to secure the network.
3. Record address growth
Finally, the number of Bitcoin addresses with a non-zero balance also reached an all-time high. Similar to mining difficulty, growth in non-zero addresses has been relatively consistent year after year regardless of market sentiment. As of this writing, there are more than 44.6 million addresses with some amount of the token. Just five years ago, this figure was 23 million.
The idea is that non-zero addresses can serve as a proxy to measure network growth and usage. With this number continuing to rise, and at a rate not seen since Bitcoin hit its all-time high in November 2021, there is good reason to believe that perhaps this crypto winter is just beginning to thaw.
RJ Fulton has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.