Bitcoin Forum

Hi all,

Just wondering if in general you tend to see an increase in coin prices with the increase of difficulty? Is it a supply and demand factor?

amount of difficulty doesn't change supply or demand so it shouldn't affect anything in my opinion. difficultly just means it is harder to find blocks (it will take longer with the same hashpower as before) but there will still be same number of blocks, same reward, same supply and same sell pressure from the miners.

however difficulty may have some indirect effect. for example when an altcoin has low difficulty and is easy to mine and profitable, many will do it and because of that many will start talking about it everywhere and hyping the coin. and altcoin market moves with hype more than anything else. it may be possible that low difficulty and ease of mining can lead to higher prices.

and that may also be the reason why when people can't mine a coin anymore as easy as before they dump all they have and prices go lower.
(mostly my guesses though)

Difficulty increments mean more competition for the block rewards, which usually means the price is going up. It is sort of a chicken-egg problem, it's hard to see what comes first. Generally it's accepted that hashrate follows money, so the price increase happens before the hashrate increase because miners just follow the money, then it's a snowball effect of increasing hashrate and price.

If difficulty is high miners are a bit out from market. Mostly traders are in. Does it make sense about coin prices? I think no. So i think it doesnt affect at all.

Its not 100% but they often do correlate