Bitcoin Hash Rate Surges 30%, Is it Really Bullish for BTC Price?
- Hash rate spikes to 108.4 Th/s, Miners unaffected by the drop in BTC price?
- No capitulation, But what if hash rate & difficulty continues to grow?
- The answer is in the next Bitcoin reward halving
- In the past 5 months, the Bitcoin price has lost over 48% of its value, going from $13,900 to $7,200.
Since hitting 2019 ATH, we have been constantly on a decline and on November 22, we hit six months low at $6,785. During this bloodbath, the world’s leading cryptocurrency lost more than 21% of its value and sent the altcoins in free fall.
For now, BTC is trading above $7,000 but CT commentators have turned bearish and expecting more blood ahead. These bearish predictions are as low as $6,400, $5,500, and $4,500.
Bitcoin price lost 51% of its value in the second half of 2019, Source: TradingView
Miners unaffected by the drop in BTC price?
Almost the exact opposite of the price chart is the hash rate of the Bitcoin network.
In these last 5 months, the hash rate continued its uptrend that started in December 2018 only to peak at 110.6 Th/s on October 23.
The day BTC hit 2019 high, the hash rate has been at just 68.37 Th/s while the day Bitcoin hit $6,785 this week, it has been at 83.53 Th/s.
But we are back above $100 Th/s. On Nov. 23, the hash rate of the network was at 106.13 Th/s. In the past 24 hours, another 15.4% has been added bringing it to 108.44 Th/s and on way to break into another all-time high, as per Bitinfocharts.
Bitcoin network hash rate back above 100 E, Source: Bitinfocharts
No Capitulation, But what if Hash Rate & Difficulty continues to Grow?
Based on this data, investor and entrepreneur Alistair Milne said the rise in hash rate suggests miners aren’t concerned with the price action.
“There is NO miner capitulation,” he tweets on Sunday, adding, “They are acutely aware of the upcoming halving and are apparently unphased by the recent dip.”
Popular analyst PlanB also shared similar sentiments as he stated, “+2% difficulty adjustment: no miner capitulation.”
Bitcoin mining difficulty that saw a drop of 7% recently saw a positive adjustment of 2%.
If miners were capitulating, difficulty would have crashed, stated economist and trader Alex Kruger.
However, Kruger recently also tweeted that many miners will, in fact, capitulate if “hash growth continues unabated.”
– this is a bear market, price action says so
– price set a local bottom today
– $8000 will trade again soon => short above
– good spots for longs: $6400/$6000
– high odds halving won't be bullish
– many miners will capitulate if hash growth continues unabated
— Alex Krüger (@krugermacro) November 23, 2019
With hash rate on its way to breaking into a new ATH and next adjustment in mining difficulty to be of 5% in mid-December, miners especially independent miners would capitulate if BTC price further breaks down as experts have been projecting. Capitulation would then drive these miners to sell their BTC that would then further put downward pressure on Bitcoin price.
The Answer is in the Halving
However, Samson Mow says the reason for BTC price being down is because “we’re still in the phase where we mint 1,800 BTC a day.”
Bitcoin is down because we’re still in the phase where we mint 1,800 $BTC a day. At $9,000 price levels, $16.2 million a day is required to maintain a stable price. The upcoming halving will fix this. Weak hands can GTFO. https://t.co/05j6nc5Wci
— Samson Mow (@Excellion) November 24, 2019
He explains how at $9,000 price levels, we need $16.2 million a day to maintain a stable price. But with next the reward halving, the inflation rate will cut down from the current 3.70% to 1.80% and it will “fix this.”
While analyst Willy Woo is warning not to “expect price will repeat past halvenings” and Kruger has a “bearish thesis around the halving,” Mike McGlone, senior commodity strategist at Bloomberg Intelligence is still bullish because, “with a supply that’s guaranteed to be limited, yet demand is picking up with more adoption, I view that as very attractive for price.”