The post Network Hashrate Takes A 20% Dive appeared on BitcoinEthereumNews.com.

The post-halving world of Bitcoin continues to throw curveballs. After a hashrate surge to celebrate the block reward reduction in April, Bitcoin’s computational power has taken a nosedive, dropping 20% in recent weeks. Related Reading This unexpected decline has ignited a debate among analysts, with some sniffing out a fire sale and others urging caution. Source: BitInfoCharts Bitcoin: Hashrate Hiccup Or Miner Exodus? Hashrate, a measure of the combined processing power dedicated to securing the Bitcoin network, typically climbs after a halving event as miners invest in more powerful rigs to compete for the reduced rewards. However, this time around, the trend defied expectations. Experts like Maartunn, a pseudonymous analyst at CryptoQuant, believe this signals a potential “miner capitulation.” Less efficient miners are now likely throwing in the towel. The halving, which cut block rewards in half, squeezed profit margins for miners using older equipment. As these miners shut down their operations, the hashrate dips. Bitcoin is now trading at $66.306. Chart: TradingView Hash Ribbons Flash Warning Sign Supporting Maartunn’s theory is a technical indicator called Hash Ribbons. This metric tracks the difference between short-term and long-term hashrate averages. When the gap widens, it suggests a decline in mining activity, potentially due to less efficient miners dropping off. The recent hashrate plunge has triggered a spike in Hash Ribbons, historically a sign of miner capitulation that has often coincided with price lows for Bitcoin. Source: CryptoQuant Bitcoin Miners Selling Off? Further fueling the capitulation theory is a decrease in Bitcoin’s Miner Reserve. This metric tracks the amount of Bitcoin held in wallets associated with miners. A decline in the reserve suggests miners might be offloading their mined coins, potentially to cover operational costs or to exit the market altogether. Undervaluation Signal Or Cyclical Dip? Maartunn interprets these signs as a…

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Filed under: News - @ May 17, 2024 12:26 am