Bitcoin (Bitcoin) On July 3, its biggest mining difficulty dropped by nearly 28%, but a model suggests that the BTC price will not bottom until October.
in a Series of tweets On July 2, investment manager Timothy Peterson marked the relationship between Bitcoin price and hash rate as controversial evidence that the decline has not yet ended.
Hash rate model: the long road to the bottom of Bitcoin
On Saturday, the difficulty of Bitcoin mining dropped by 27.94%, and the block height was 689,472, the largest in its history.
As Cointelegraph Explained before, The decline is in response to the continued migration of miners out of China and the subsequent loss of hash rate.
For miners who are still working, the reduction will be a profit increase-the difficulty will automatically take into account changes in the hash rate, making it more attractive for mining when it drops.
It is expected that within a few months, the constantly changing miners will not fully return to their craft. At that time, as the hash rate increases, the difficulty may increase again-more competition and more power to compete for the same reward.
it’s a Classic spell Among Bitcoiners, “price follows hash rate”-but if this is true, then a model depicting this phenomenon is painting a sober picture of future price behavior.
Peterson pointed out that the relationship between price and hash rate is “useful” when marking the top of the macro price.
The attached chart shows the peaks in 2013 and 2017, corresponding to the peaks of the entire four-year halving cycle.
2021 looks similar, but since the surrender in May, this relationship has tended towards 1-the point where Bitcoin prices should be completely “corrected”.
“Based on the current trend of P(h), this bubble will end on October 31st,” Peterson concluded.
“The ratio includes any combination of higher hash rate and lower price. So increasing computing power and stabilizing prices also solved the bubble.”
In other words, the return of miners may prevent further price declines that have occurred recently, but the bulls may still have to wait longer than expected to see a higher level return.
Peterson made an important warning. He warned that such a simple model “has many problems,” and he did not use it himself.
Choose your year-end price showdown
This model is not the only source of Bitcoin’s return in the second half of this year.
As Cointelegraph Report, Analysts compare 2021 to the two previous top years, where the first local price peak occurred, followed by a correction, and then soared to the final peak.
At the same time, after BTC/USD issued red candles for the third consecutive month, the stock-flow price model echoed the beginning of 2019, just after the pit of a major bear market in Bitcoin.
For the next six months, the creator PlanB Say, Is essential to its utility.