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Bitcoin Mining Difficulty Breaks Through New ATH, Creating Better Conditions for Market Retrace

Fri, 02/04/2022 - 09:11
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Arman Shirinyan
As mining difficulty rises, the market may have a chance to get back on its feet
Bitcoin Mining Difficulty Breaks Through New ATH, Creating Better Conditions for Market Retrace
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The difficulty of Bitcoin mining saw another spike lately and reached a new ATH, which could be a determining factor for the future movement of the first cryptocurrency amid a deep market correction.

New highs in difficulty

The increasing mining difficulty of Bitcoin is the first step toward the easing of existing selling pressure on the cryptocurrency. The rapid increase of difficulty was also followed by a spike in the hashrate after the crackdown on the industry by the Chinese government.

As for correlation with a price: the rapid drop of the hashrate led to the deficit of the "young" supply on the market, which allowed investors to push the price higher than it was before.

With the difficulty increase on the network, it will take miners more hash power to mine one Bitcoin compared to previous periods, which should have a positive effect on the market price.

How could high difficulty affect the market?

While the increasing difficulty should not affect large players in the mining field, the owners of small private farms will experience the bulk of the losses tied to the fact that the difficulty of Bitcoin mining increases while the price stays the same or drops further.

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The decreasing selling pressure from Bitcoin miners will act to remove additional resistance that exists on the market, which currently remains in a correction despite a short recovery rally that put Bitcoin close to $39,000.

At press time, the first cryptocurrency trades close to $38,000 and shows 1.6% growth in the last 24 hours. The crypto market in general remains in the green zone with the majority of altcoins going through 3-5% growth.

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About the author

Arman Shirinyan is a trader, crypto enthusiast and SMM expert with more than four years of experience.

Arman strongly believes that cryptocurrencies and the blockchain will be of constant use in the future. Currently, he focuses on news, articles with deep analysis of crypto projects and technical analysis of cryptocurrency trading pairs.