TL;DR
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Typically when the Bitcoin hash rate bottoms out, so does the price of BTC – and right now, it looks like the Bitcoin hash rate has bottomed out.
Full Story
There’s tea leaves, there’s astrology, and then there’s the Bitcoin hash rate.
None of them are a perfect indicator of the future, but some believe they’re pretty close.
We don’t know too much about tea leaves or astrology, but here’s what the Bitcoin hash rate is:
The hash rate is a measure of the total computational power used by Bitcoin miners to process transactions and secure the network.
(Which by extension indicates how easy or difficult it is to mine BTC).
Right now, Bitcoin’s total hash rate has declined to 556 exahashes per second (EH/s), down from 658 EH/s in late May.
As a result, the Bitcoin network has automatically adjusted its block-mining difficulty down by 7.8%.
What does this all mean?
In short, typically when the Bitcoin hash rate bottoms out, so does the price of BTC.
Long story longer: if the price of BTC increases, transaction fees will also increase. As transaction fees increase, mining becomes more profitable, motivating miners to contribute more computational power, increasing the Bitcoin hash rate.
Is a bottomed out hash rate a perfect indicator that the price of BTC is about to rise?
Absolutely not!
But we sure hope things bounce back up.
