Some people are celebrating the strongly increasing hash rate of #Bitcoin. Difficulty skyrocketed in the last months, it is now almost 5 times higher thank start of the last rally ( Oct ‘17 was 1e ^12 now well over 5e^12). This makes network way more secure, but this might be a sign that the bear market will continue for quite a while.
When the price increases, hash rate cannot follow very quickly. This means that the miners make a big profit and only a small fraction of the mined bitcoin are enough to cover their costs. (Electricity, mainly). Thus, they don't need to sell all new bitcoin and can hodl.
When the hash rate slowly adjusts to the increased price, the margins start to decrease and more bitcoin must be sold to cover the costs for mining. The price pressure increases.
Assuming a constant absorption rate measured in $, the price will start to decrease until an equilibrium is reached. This is only possible when the hash rate does not increase anymore (or increases only due to better and not more hardware).
In this sense, the premise made by @saifedean that you cannot increase the supply of Bitcoin due to increased mining is violated in the short term. Not more bitcoin are produced but more are forced onto the market.
In this current difficulty boost lot of miners are getting less and less reward from their now quite obsolete hardware (Avalonminer 741, mainly) so they are selling all the mined co ma to pay for new hardware and amortise current one.
Thus, I expect the bear market to end when we don't see any more substantial increase in hash power and the price goes sideways for a few weeks.
F1
Interesting opinion.
It seems to me that 5 touches of the bottom is enough to assume that now a new level will break through at the level of 7500-8000. Once we do this, we can say that the price will not fall to 6000. But this is my opinion, which is based on personal experience, analysis and graphics...
