In the past, hashrate declines have coincided with several large BTC price corrections. Hashrate refers to the total computing power associated with verifying transactions on the bitcoin (BTC) blockchain. More computing power means more network security and interest in the potential of bitcoin mining. Bitcoin network computing power as an indicator of price growth An increase in computing power is often associated with expectations of an increase in the price of BTC. Analysts have found evidence that the bull cycles of 2013 and 2016 were characterized by an increase in the difficulty of mining Bitcoin. For example, the 70% increase in 2021 coincided with many investments and large orders for miners' computing equipment. Still, determining which of the above is a cause and which is an effect is nearly impossible. Some other examples related to this situation: Argo Blockchain buys 320-acre (about 1,294,994 m2) land in Texas to expand operations, a Bitfury subsidiary mine goes public, a Chinese lottery service acquires the BTC.com mining pool. What's it like in the end? Still, there have been periods of absolute dissonance. So maybe there is no direct correlation between Bitcoin's price and computing power? Despite the fact that it's virtually impossible to measure precisely - the seven-day hashrate average gives relatively good results when detecting changes in subsequent price trends. BTC hashrate vs. BTC price The year 2017 stood out when it came to the price of BTC, as bitcoin then entered a phase of parabolic price growth. In August, the hash rate tripled to 6.8 TH/s. The theory that hashrate can predict the price of Bitcoin was challenged when computing power suddenly dropped by 25%. It had no apparent effect on the price at the time. On the other hand, Bitcoin's 132% price increase in the last two months of 2017 seems to be reflected just a few months later. Hashrate more than doubled between December 2017 and March 2018. The second half of 2018 and 2019 provides more interesting data. The BTC price encountered more vigorous spikes and periods of stagnation. Meanwhile, the hash rate doubled from April 2018 to November 2018, peaking at 54 TH/s. Interestingly, this preceded a sharp correction in BTC to $4,000. Both indices reached a bottom in mid-December 2018, while the first half of 2019 presented a synchronized spike between the BTC price and the hash rate. The second half of 2019 saw completely opposite trends, the hash rate increased by 66% while the BTC price dropped by 38%. This time, the BTC price peaked at $10200 in mid-February 2020. In the case of the hash indicator, this happened just three weeks later. Bitcoin's current price and hashrate pass the ATH The latest data shows a strong relationship between the two indicators. The hash rate of 166 TH, which peaked for the second time on February 8, appears to be mimicked by BTC, which reached nearly $55,000 two weeks later. There is a strong relationship between hashrate and price. Although there have been periods of six (or more) months when the miners' power has continued to rise despite the stagnant price of BTC. The same can be said for sharp declines in the hash rate, such as the recent one in October 2020, which had no impact on the BTC price. Therefore, such a measure for predicting short-term price movements seems unreliable. In other words, the trends of the hash indicator and price, while dependent, provide a plethora of mixed signals that can certainly be misleading. However, despite the apparent long-term relationship, there are other factors to consider. These can have a more immediate impact on price - new miner equipment, regulations, seasonality, geography and fluctuations in energy prices around the world. These are just some of the potential causes that skew the correlation. Tags bitcoin btc hashrate the computing power of the bitcoin network
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