The Bitcoin hashrate has increased 33% in just two days while the BTC price trails behind
Bitcoin hashrate has risen sharply from 91,290,582 TH / s on April 4 to 121,029,181 TH / s on April 6. Historically, hashrate and Bitcoin prices have shown a pretty close relationship, with the Correlation index is 0.77.
Bitcoin hashrate increased but will Bitcoin price fluctuate in the same direction?
Data sharing company BitTorrent, a subsidiary of Tron, is currently testing the live streaming platform on the blockchain in the third quarter of 2019. This relationship makes sense when considering the hashrate partially represented for Bitcoin production costs for miners and, on the other hand, the overall security of the Bitcoin network. In other words, the higher the hashrate, the more it costs someone or a company to attack the network. This decentralized trust is one of the key values that Bitcoin possesses.
Source: Blockchain
Within the same time frame, the Bitcoin price only increased by 0.92%. The rapid growth of hashrate comes from the recent favorable adjustment in Bitcoin mining, as the coin’s hashrate has continuously witnessed sharp declines in recent times.
Source: Quandle
If the BTC price/hashrate correlation is constant, we can expect to see significant price increases in the near term. However, the upcoming story is quite complicated when the halving – the event that halves Bitcoin’s block reward – is only about a month away.
Provided that all other conditions are constant after the halving event occurs, the mining revenue will also be halved. That means that for miners’ revenue to remain at the same level, the BTC price will have to double (constant mining efficiency). The recent rise of Bitcoin hashrate could indicate that miners are betting on the second scenario.
What’s next for Bitcoin?
Somehow, someway, the Bitcoin price has continued to show resilience after March 12’s capitulation event, decisively retaking $ 7,300 just minutes ago after trying an failing to surmount this level multiple times over the past few days. Bitcoin’s latest bout of strength comes as the stock market has managed to mount a strong comeback, despite the coronavirus outbreak and economic conditions continue to weaken on the weekend, epitomized by the 6.6 million jobless claims in the U.S. alone last week.
With the recent price action, which has meant that Bitcoin has almost fully retraced the crash on March 12th, analysts have become increasingly bullish.
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