Bitcoin's Road to Recovery: Hashrate Uptick and Market Shake-Up Essential, Say Analysts
Summary:
After over two weeks in a market slump, Bitcoin prices remain 13.8% below their all-time high, and experts suggest a recovery hinges on an increased hashrate and a market shakeup that removes "weak hands". Independent analyst Willy Woo believes the hashrate recovery is taking longer this cycle due to profit boosts from ordinal inscriptions. Fellow analysts, Ali Martinez and Mr. Anderson, also weigh in, stating Bitcoin traditionally surges above average mining costs and that a market "shake out" may stabilize or boost lower prices.
For more than a fortnight, the Cryptocurrency Bitcoin (BTC) has been experiencing a downside trend, plummeting by 13.8% from its record high of $73,835 on March 14. To counteract this downward trend, experts suggest an uptick in Bitcoin's hashrate and an elimination of "weak hands" is necessary.
Freelance analyst, Willy Woo stated that Bitcoin's price can only recover fully when "weak miners exit" and the hashrate starts to rebound. Woo commented on his June 21 post on a social platform, X, that it is taking a long duration for the miners to withdraw post-halving, a situation which he described as noteworthy.
The theory of miner capitulation suggests that once Bitcoin descends below a specific price rendering mining unprofitable, miners could turn off their machines and sell off their coins. When Bitcoin gets rid of "weak hands", it translates to inefficient miners relying on obsolete hardware being pushed into bankruptcy as the costs outweigh their returns. Equally, others are necessitated to upgrade to more advanced hardware due to their slashed revenues. Woo further explained that miners are compelled to sell their BTC to mitigate their losses or fund hardware upgrades. Once this selling frenzy subsides and only the strong persist, they await higher prices.
Woo noticed longer capitulation during the current period, likely due to the benefits derived from continual inscriptions. He displayed a graph comparing the sluggish hashrate recovery to previous cycles. During the 2017 cycle, the hashrate recovered in just 24 days and a mere 8 days in 2020. Currently, it is still under recovery at 61 days and counting.
Bitcoin's hashrate depicts the number of attempts per second to crack a mathematical equation determining Bitcoin transactions' validity. When the hashrate surges, it implies an escalation in computational power usage, thereby demanding more energy and extending transaction times. According to another analyst Ali Martinez, he stated on his June 15 post on platform X that the prevailing mean mining cost of Bitcoin is $86,668. He added that historically, Bitcoin has always surged above its mean mining cost.
Another analyst, Mr. Anderson opined that a "shake out" is needed to counteract the downward Bitcoin trend. He explained on his June 18 post on platform X that this involves a sharp price drop that forces less dedicated traders into selling, inciting more panic and heightened selling. Consequently, as weak traders flee, prices often stabilize or rebound as more committed traders venture in to buy at lower prices.
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Published At
6/22/2024 12:51:59 AM
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