Bitcoin recently broke down past $8000 and is struggling to find support around $7,800, the similar level where Bitcoin broke out in early April in an attempt to break above $10,000. The overall market capitalization is also in a steady decline breaking $400 billion from its all-time highs of over $830 billion. Today, it is below $7,500 at time of this post.
The market capitalization has been nearly cut in half resulting in major price declines in Bitcoin and nearly every Altcoin on the market. Aside from the declines in price action and market capitalization, there is one area where we are seeing growth and that is in hash rate. This may lead us to believe that miners know something we don’t.
There is a steady increase in hash rate during the months leading up to and after the market sell-off. Looking at a chart of the total cryptocurrency market capitalization and hash rate side by side will show a clear divergence. Why then is it that hash rate is increasing while prices are still in a continuing decline? It is a fact that as more miners join the network, the higher the network hash rate is. This tells us that even though Bitcoin prices are falling at a steady pace, miners are still very much interested in mining Bitcoin. The overall outlook on Bitcoin is bullish, at least in the eyes of the miners. After all, miners would not want to allocate their resources mining a digital asset they believe to be worthless.
If the hash rate were to be falling in congruence with price, then there would be cause for concern. That would tell us that miners are less interested in mining Bitcoin and could be turning their focus to mining other cryptocurrencies or not mining at all.
Miners are arguably the most important asset to the Bitcoin ecosystem because they work to create new blocks as well as verify all transactions to ensure the network is secure. A strong group of miners who are willing to support the network creates the image that Bitcoin is very strong and well positioned going forward. Without a strong group of miners to support the network, the future of Bitcoin would surely spell trouble.
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