Bitcoin mining difficulty once again giving mixed signals amid Bitcoin’s 10% correction
Bitcoin mining has always been a powerful indicator of demand for the first cryptocurrency and has sometimes been used as one of the ways to determine market conditions. According to data from WuBlockchainBitcoin’s hashrate today lost more than 1%, which is considered a moderate loss.
How hashrate reflects market conditions
In addition to reflecting a demand for a cryptocurrency, hashrate can give traders and investors a hint about the conditions of the market, if it is in accumulation or in distribution. During the summer bullrun in 2021, the market saw the biggest drop in the hashrate in history after a Chinese crackdown on the digital assets industry, which has also affected mining.
The bullrun was mainly due to the rapid decline in BTC issuance, which then caused a lack of selling pressure in the market. Later, the market saw a massive 50% correction moments after the hashrate returned to pre-crackdown levels.
How does hashrate affect the market today?
According to mining difficulty and hashrate charts, we see a constant increase in both metrics, which shows that demand for Bitcoin remains high despite the unpleasant market conditions.
But as Bitcoin continuously loses its value and the hashrate increases, the market may actually see an increase in selling pressure, which could drive Bitcoin further lower.
At press time, the first cryptocurrency is trading at $40,122 and has reached the trendline support, which acted as a bouncing platform since Feb. 22.
