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January 05, 2015, 05:53:55 AM |
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A major factor contributing to the price crash is that the total BTC Network Hash Rate has spiked nearly 14% in just the past 3 days.
The block time adjustment will not occur for another 7.1 Days. The BTC protocol is designed so that a Block is found every 10 minutes (25 BTC). Well at the current hashrate, a block is being found on average every 8.9 Minutes.
This "over minting" will not be time corrected for another 1132 blocks.
So what it boils down to, is miners, and pools, who mine and dump, are on average flooding the exchanges with (my guess) 14% more BTC sells, or better said selling coins at a 14% faster rate, than if the difficulty and average block time was performing at its intended speed.
So the math for the next 7 Days:
(1132 Blocks x 25 BTC) x 14% = Approx 4000 BTC = Approx $1,000,000 that is surplus or "too soon" within the normal expected timeframe. Basically that figure of 4000 BTC will happen faster than "predicted".
Basically the market has fallen out of equilibrium due to the fact that additional "born too soon" coins are being dumped, and while the numbers are not that outrageous, any type of sell off spikes fear, which leads to panic....
This is why the difficulty is continuing to rise and price is continuing to drop.
The blockchain will reset, times corrected, price will recover.
Strato
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