As the 2023 bull rally drives Bitcoin (BTC)’s price movement to new five-month highs, the largest cryptocurrency’s network is experiencing new records in activity. Data from MiningPoolStats, show that on January 26th, Bitcoin’s hash rate reached a new record high.
The entire amount of computer power that is linked to the Bitcoin network is referred to as the hash rate. If the current rate of increase in BTC prices is maintained, then it is likely that a new level will be registered.
According to the findings of on-chain analyst CryptoQuant, an increase in Bitcoin values would prompt a greater number of users and mining farms to turn on their rigs, which would lead to an even higher hash rate.
CryptoQuant added that the increasing hash rate would be a sign that strong liquidations were about to occur, which may lead to a reduction in mining activity and a subsequent decline in price.
The expert believes that the opposite is true, citing data that is stored on the blockchain. This is despite the fact that there seems to be a direct correlation between the spot price of Bitcoin and the hash rate. He is confident that prices and the peaking hash rate of bitcoin can move in opposite directions, which will affect the coin’s valuation.
Furthermore, the expert pointed up instances in the years 2021 and 2022 in which increasing hash rates led to major price retracements after strong gains in price. The average price drop during the selloff was 19.5%, with the steepest drop being 37%. There were seven events that caused the selloff. He goes on to say that prior to this downturn, the coin’s valuation had a tendency to report a maximum increase of 11%.
BTC is currently valued $22,968 as of the time of this writing, which represents an increase of over 10% in the past seven days but a decrease of 0.06% in the past twenty-four hours.
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- Source: https://coinpedia.org/bitcoin/bitcoins-hash-rate-hits-new-records-what-next-for-btc-price/