Bitcoin (BTC / USD) Price correction? - ONE DAY - Difficulty adjustment
After the Negative Difficulty Adjustment, there have been drops in the price of Bitcoin in the history of Bitcoin.
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more data
source: https://btc.com/stats/diff
As we see in the chart, the generally negative adjustments in bitcoin's difficulty have caused a drop in bitcoin's price in the following days. Why? We must first see that the difficulty of Bitcoin
source: https://diff.cryptothis.com/
Bitcoin difficulty
Bitcoin鈥檚 difficulty is designed to adjust every 2016 blocks - or approximately every two weeks. This adjustment is based on changes in the network鈥檚 hashrate, and occurs regularly in an attempt to ensure that the network continues to solve new blocks at a rate of one every 10 minutes.
If the hashrate during the past two weeks has gone up, the difficulty will go up as well, making mining more challenging. If the hashrate has dropped, the difficulty level will decrease, making blocks easier to solve.
When there are significant negative changes in network difficulty, it indicates that the bearish cycle may be about to start
How does the bearish cycle occur as a result of a decrease in hash difficulty?
If the price of Bitcoin falls, mining costs may be negative, in the medium term they will have to stop mining or mine with losses.
Since the price of Bitcoin is lower, they will have to sell more Bitcoin because they have the same costs with a reward of mining a lower product for the lower price. This creates a downward pressure (plus the same supply demand) that can cause the price to fall again, generating a cycle. This generates mining capitulation
What are the costs of mining Bitcoin?
- Mining equipment,
- Infrastructure,
- Operating expenses,
- Electricity expenses
How do you get out of the cycle?
There comes a time when Bitcoin ends up selling or they are not willing to sell Bitcoin at such low prices or they are absorbed by investors who buy at low prices.
Graph Analysis
The graph has added the information of the relevant falls in the mining difficulty (blue lines) one by one, information provided by https://btc.com/stats/diff
As we see in subsequent days there have been price corrections (red arrows)
Current situation
As we see in the graph, the decrease in the hash is now at -4.5%, it should be greater than -6%, to be relevant, it could indicate the beginning of a bearish cycle due to the decrease in the hash.
Las correciones del precio no son inmediatas a veces se producen dias despues de una disminucion significativa del hash
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