Reduced hashrate or pressure to sell from miners does not affect Bitcoin price, so what is crucial?
Judging by historical data, the Q2 of each year is usually pretty strong for Bitcoin. It posted a positive return 6/8 times, reflecting a negative return only once before 2021. In fact, Q2s of 2017 and 2019 saw impressive returns of 157.54% and 57%, respectively. However, with the positive profit chain broken, Bitcoin’s ROI in the second quarter was minus 40.37% over the past two months.
Bitcoin price in the first quarters of the year shows strong volatility
The second quarter got off to a pretty good start with Coinbase CEO Brian Armstrong cashing in more than $ 13 billion after officially listing directly on the Nasdaq on April 14. However, the May 19 carnage comes amid ongoing regulatory concerns, changing tastes among institutional investors, Elon Musk’s bragging rights on Twitter, and the Chinese authorities’ repeated crackdown on the mining industry that made this quarter quite a stressful and arduous quarter.
In addition, the recent drop in Bitcoin hashrate is hands down one of the largest in history at almost 28%. But will this really hinder the strong growth of the Bitcoin ecosystem?
Decreasing the hashrate usually makes mining relatively easier due to less competition. In addition, the block reward was almost constant throughout. So the decrease in hashrate is not a problem. In particular, the Bitcoin network also provides incentives for miners to increase their hashrate again.
Miners net flow | Source: IntoTheBlock
One of the other concerns that the community has been haunted is miners’ selling pressure. Contrary to popular belief, miners only make up 6% of the total Bitcoin volume. In addition, this sell-off is often triggered by speculation, profit-taking, and panic selling when an FUD occurs. Now that things are slowly returning to normal, Bitcoin is also recovering more noticeably.
Large trading volume | Source: IntoTheBlock
However, there is one hurdle that Bitcoin must overcome at this stage.
Institutional investors’ loss of interest in the market has created a sense of insecurity in the community. In fact, the total value traded on major deals is down more than 61.7% from its recent highs in February earlier this year. In addition, with the upcoming unlocking of GBTC, the same decline should increase.
The big players have always been the main driver of most bull runs. In order for Bitcoin to get back on track, the cops have to step in and show interest again.
According to the Ambcrypto