What Bitcoin's hash rate surge means for BTC price action

05 May, 2019 | Updated: 05 May, 2019
by Will Heasman
Analysis
What Bitcoin's hash rate surge means for BTC price action

As reported Bitcoins hash rate recently hit a 6-month high, reaching a peak on the 2nd of may but what does this mean? Is there a correlation with Bitcoin’s price action?

Last week, Bitcoin’s (BTC) hash rate reached a 6 month high of 58,109,199 TH/s, proving an almost 40% increase since the start of 2019 and only 6% off its all time high.

 

What is hash rate?

Hash rate is defined as the total measure of computing power within the Bitcoin network, the high the hash rate the more miners are currently chipping away at blocks.

What does it mean for BTC?

Essentially rising hash rate is indicative of an increase in miners, or at least an increase in the power miners are putting into solving block equations. Therefore, an increase in the power behind the network is typical of increased miner sentiment in BTC; the idea being that BTC will become profitable to mine as the price increases.

Rising hash rate = rising price?

historically hash rate appears to have followed a similar uptrend to that of the BTC market:

Moreover, looking at this latest spike in hash rate, it seems to have coincided nicely with the increase in BTC on May 2nd in which the BTC price managed to tap resistance and reach $6k on Bitfinex.

BTC/USD Chart provided by Tradingview

Back during August when BTC reached a hash rate all-time high, David Sapper, chief operating officer at the Australian-based cryptocurrency exchange Blockbid, noted a correlation between has rate and investor security in the long term health of the asset:

“The increased hash rate means people are here for the long-term because they’re happy to just accumulate what they have, potentially even run at a loss. At the same time, they do sometimes have to clear house and dump.”

So while there may not be a direct correlation to price action, hash rate does give us an idea of investor and miner sentiment in the increasing price of BTC.

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Read more about: Bitcoin (BTC)

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