Bitcoin (BTC) Mining Difficulty Drops 7.8%, Suggesting a Positive Outlook for BTC Price, Analysts Say
- WBOYOriginal
- 2024-07-16 01:31:28913browse
Current Trends in Bitcoin's Hashrate and Difficulty The recent difficulties faced by Bitcoin miners may actually be a positive indicator for the price of Bitcoin
Bitcoin’s mining difficulty decreased by 7.8% recently, which could be a positive sign for BTC price, according to analysts.
Here's what you need to know:
Bitcoin's hash rate dropped from 658 EH/s in May to 556 EH/s on June 28, as per Hashrate Index.
Bitcoin’s block-mining difficulty decreased from 83.68 TH/s to 79.50 TH/s over the weekend.
Drops of this magnitude in Bitcoin's mining difficulty are quite rare, having last occurred in December 2022 following the collapse of FTX, which caused bankruptcies of several large mining companies and a bottoming out of Bitcoin's price after a year of decline.
According to a recent report by CryptoQuant, "miner capitulation" has historically coincided with a bottom in the Bitcoin market, making it crucial for traders to monitor the health of miners to identify optimal market entry points.
The profitability of Bitcoin miners is directly tied to the value of Bitcoin in the market, and with BTC's significant price decline since March, the mining industry has seen a major decrease in its revenue.
The Bitcoin halving event in April has further exacerbated the challenges faced by miners.
"Bitcoin miner reserves decreased by roughly 20k BTC since June," Vincent Maliepaard, IntoTheBlock's marketing director, told Decrypt in an interview. "The Bitcoin halving two months ago might be a driver behind the recent miner sell-off as margins have decreased since then."
A metric called "hashprice" measures the profitability of the mining sector relative to the amount of work done, and for Bitcoin, this hashprice has dropped to record lows over the past three months.
According to Compass Mining, periods of such low profitability typically last for 6 to 12 months following a halving event.
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