Bitcoin mining difficulty just fell by a record,,,

[seje]

Bitcoin mining difficulty just fell by a record 28% — But will this help BTC price recover?


Bitcoin (BTC) has recorded its biggest mining difficulty drop of nearly 28% on July 3, but one model suggests that the BTC price will not bottom until October.

In a series of tweets on July 2, investment manager Timothy Peterson flagged the relationship between Bitcoin price and hash rate as arguable evidence that the dip is not over.


Hash rate model: Long road ahead to Bitcoin bottom
Bitcoin mining difficulty dropped by an estimated 27.94% on Saturday at block height 689,472, the biggest in its history.

As Cointelegraph previously explained, the drop is in response to the ongoing miner migration out of China and the subsequent loss of hash rate.

For miners still at work, the decrease will be something of a profit boost — difficulty automatically accounts for changes in hash rate, making it more attractive to mine when it drops.

Miners in flux are not expected to return to their craft completely for several months. In that time, difficulty will likely increase again as hash rate goes up — more competition and more power competing for the same set reward.

It is a classic mantra among Bitcoiners that “price follows hash rate” — but if that is true, one model charting the phenomenon is painting a sobering picture of future price behavior.

Peterson noted that the relationship between price and hash rate is “useful” when it comes to marking macro price tops.

An accompanying chart shows spikes in 2013 and 2017, corresponding to tops which held for an entire four-year halving cycle.

2021 looks similar, but since the May capitulation, the relationship has been trending towards 1 — the point at which the Bitcoin price should have fully “corrected.”

“Based on the current trend in P(h), this bubble would finish collapsing by 31 October,” Peterson summarized.

“The ratio includes any combination of a higher hash rate and lower price. So increasing hash rate and stable price also resolves the bubble.”



https://cointelegraph.com/news/bitcoin-mining-difficulty-just-fell-by-a-record-28-but-will-this-help-btc-price-recover