Bitcoin [BTC] has experienced a significant rally with a price increase in recent months. While some traders are expecting a price correction due to Bitcoin’s significant rise, comments made by Brian Armstrong, CEO of Coinbase [BASE], could potentially tip the scales in Bitcoin’s favor.
Brian mentioned Coinbase’s interest in integrating the Bitcoin Lightning Network in a tweet on April 8th. The Bitcoin Lightning Network is a second-layer protocol that allows for quick and inexpensive off-chain user transactions. The Lightning Network aims to improve Bitcoin’s scalability and usability by establishing a network of payment channels.
Brian Armstrong’s comments have resulted in a significant increase in Bitcoin social activity. According to LunarCrush data, the number of social mentions for BTC has increased by 25.1%, while the number of social engagements related to BTC has increased by 8.4%.
The weighted sentiment was also positive, indicating that the crypto community had more positive than negative things to say about BTC.
The decline in Bitcoin’s mean transaction volume also indicated positive support for the currency. This drop in transfer volume indicated that many addresses preferred to keep their BTC and wait for prices to rise.However, traders were not of the same mind. According to Coinglass data, the number of short positions taken against BTC has increased in recent weeks. At the time of publication, the percentage of short positions taken against BTC had risen from 49% to 52.16%.
The growing selling pressure on miners could be one reason for the rising number of short positions. Mining difficulty has risen dramatically in recent months. When mining difficulty is high, cryptocurrency miners face a number of challenges, including increased competition, higher energy costs, and the need for newer hardware to compete.
Miners could be incentivized to sell their BTC holdings to cover these costs. Furthermore, there was a risk of centralization, which could contradict the decentralized nature of cryptocurrencies and jeopardize their integrity.
