Despite the problematic nature of the cryptocurrency market, Bitcoin is still breaking records as more miners are turning their rigs after the difficulty of the network has been adjusted during the massive drop of the hashrate.
Breaking record
According to the difficulty chart, we can clearly see the narrow drop in June, approximately. The main reason behind it was the massive shut down of mining rigs after the price of the first cryptocurrency plunged by more than 30% in a matter of days.
New record! #Bitcoin mining difficulty is now 35.6 trillion hashes! pic.twitter.com/1bxURNTFDh
— Documenting Bitcoin 📄 (@DocumentingBTC) October 11, 2022
With increasing electricity costs and low market values, most mining rigs became unprofitable, and miners had no other choice but to shut down their machines in order to avoid additional losses.
Not best high to achieve
While mining difficulty and hashrate reflects demand for the network, it might also correlate with a potential spike in selling pressure during uptrends as miners tend to sell their holdings when the value of the digital gold increases significantly.
Previously, each spike in the hashrate led to the increase of selling pressure on the market, which is the last thing Bitcoin needs right now. Institutional and retail inflows today remain at almost nonexistent values, and the only inflows the market is seeing are aimed at shorting solutions.
However, the rising activity of miners could be considered a preliminary sign of a market reversal as they are usually considered the first group of participants that return to the industry.
Unfortunately, the main source of funding for the market would be institutional investors, and retail capital is no longer able to maintain the $1 trillion industry.
Yuri Molchan
Alex Dovbnya
Denys Serhiichuk