After falling to its lowest level in mid-March to 0.069, Bitcoin mining profitability is back above 0.1. The mining profitability turned positive this week after the mining difficulty had its second-largest drop in history.
The hash rate of the network has jumped above 100 Th/s after having its biggest drop of 45% drop in March. This jump in profitability is yet another sign of a shift in the market.
Also, daily bitcoin volume though lower than a month ago, dropping by about 100,000 transactions per day, is high compared to historical averages at above $1 billion.
One possible reason behind this drop could also be Coinbase that has started to batch its transactions to reduce the load on the network.
But as analyst Mati Greenspan said, given that Visa is reporting its spending levels to be way down this month after a drastic reduction in internet money usage due to the current lockdowns, Bitcoin could also be expected to see some negative effects.
Bitcoin having an “Existential Crisis”
Just like the bitcoin network, the price of Bitcoin has turned green, trading under $6,700 up 7% in the past 24 hours.
These gains came after bitcoin and altcoins took a back seat throughout the course of the coronavirus crisis, but they have started to gain their volatility edge back.
Although bitcoin continues to have a high correlation with the stock market, this Greenspan said is good for the cryptocurrency’s “individualism.” Greenspan wrote in his daily newsletter,
“There seems to be an existential question going around the crypto market at the moment where people are saying that if bitcoin can't rise in this environment then it probably doesn't have much of a reason to exist at all. After all, the narrative of using bitcoin as a safe haven in times of financial stress has been a rather strong one throughout the years and so now should really be BTC's time to shine.”
However, he points out how this never has been part of the flagship cryptocurrency’s white paper. Bitcoin has been invented as an alternative to money.
The ongoing volatility has been because the crypto asset is new and its adoption rate is unstable which leads to “large levels of speculation.” For Greenspan, the measure of its success won’t be Bitcoin going straight to the moon due to global uncertainty but staying on a slow and steady incline.
During the current trying times, Bitcoin’s “great success” is in the fact that it didn’t have any fundamental changes and the network is working as intended.
Gold meanwhile is doing as it always does, with no rush to go anywhere. The precious metal recorded only slight losses since the crisis began and has been an excellent store of value. Greenspan said,
“It would be nice to see bitcoin doing the same but also understandable that a lot of the weak hands have left the market in these turbulent times.”