Bitcoin (BTC) Price May Rally to $120,000 as Mining Difficulty Hits All-Time High

Bitcoin's mining difficulty recently increased by 6% to an all-time high of 101.65 trillion amid a record hash rate for the network.

Bitcoin mining difficulty recently hit an all-time high of 101.65 trillion, a 6% increase from the previous difficulty. This surge coincides with record hash rates for the Bitcoin network.

Meanwhile, a key technical indicator is signaling potential bullishness for Bitcoin, suggesting the possibility of a price rally towards $120,000.

Bitcoin Price Analysis: Technical Indicator Points to Potential Surges

Fresh data from CoinLupin, a market analyst at on-chain analytics firm CryptoQuant, reveals the price of Bitcoin crossed above the critical psychological level of $75,000 following Donald Trump’s U.S. election victory on November 5.

To estimate Bitcoin’s present price, CoinLupin utilizes the Market Value Realized Value (MVRV) indicator, a powerful traditional tool that provides insights into market valuation and potential price trends.

According to the analyst, Bitcoin’s MVRV currently stands at 2, indicating that the market's surface value is twice the on-chain estimated value, as the price climbed just above $75,000.

CoinLupin highlights that the MVRV indicator recently crossed the 365-day average and is now above the 4-year average, which often mirrors Bitcoin’s cycle.

"This suggests that the upward trend remains intact, and generally, the cycle peak tends to occur when the MVRV reaches levels between 3 and 3.6," CoinLupin adds.

The analyst claims that a 43-77% increase is critical for the MVRV ratio, assuming the Realized Value (RV) remains constant. When applied to Bitcoin, this translates to a target of $95,000 to $120,000.

However, the analyst further notes that the RV is expected to rise as the market progresses with fresh demand. Considering previous cycles, he believes a peak may form above these zones.

Despite Bitcoin's dramatic increase in the last 12 months, it has barely returned to its average level on the MVRV indicator. However, the upward momentum is still maintained.

Bitcoin Mining Difficulty Surges: Impact on Network Strength

In other news, Bitcoin appears set to enter a bull run cycle for the rest of 2024 and beyond. This is evidenced in Bitcoin’s ability to hit new highs in mining difficulty.

To simplify, mining difficulty measures the difficulty of solving the complex cryptographic puzzles used in the mining process.

This recent surge suggests miners will need to work harder to mine Bitcoin. As a result, only the strongest and most efficient operators in the industry will get involved in securing the network.

The rising difficulty means miners earn less Bitcoin per unit of computational power invested, leading to thinner profit margins. However, higher difficulty is often considered good news as it helps to strengthen the Bitcoin network.

Beyond the security, the rate of emissions is reduced, fueling scarcity and price surge in the long term.

At the time of writing, the BTC price was $76,355, down 0.13% over the last 24 hours. Still, following Trump’s election victory, a Bitcoin target of $120,000 and beyond in the coming weeks seems more likely.