The leader of cryptocurrencies, Bitcoin (BTC), saw a massive spike on Sunday, breaching over $9,000 to record a January-high of $9,184. However, the price of Bitcoin fell rapidly below the $8,750 support zone and settled around the $8,600 mark. The volatile weekend, according to some experts, is mainly due to Bitcoin registering a new all-time high in computing power, or hash rate.
Source: Bitinfocharts
Hash rate resembles how many operations per second the network is capable of. Bitcoin recorded its all-time high of 126 Exhash, which equals to 126 quintillions solved cryptographic equations per second. The all-time high also enhances the security of Bitcoin’s blockchain, as the higher hash rate resembles increased difficulty of hackers successfully attacking and control at least 51% of all computing machines on Bitcoin’s blockchain – the so-called “51% attack”.
Despite the increased interest in Bitcoin mining, some experts think the all-time high is a consequence of BTC miners’ expectations of an upward price swing. Indeed, the Bitcoin network is set to undergo a “halving”, scheduled for the 14th of May – the rewards for successfully mining a block would drop in half. The “halving” occurs on every 210,000 mined BTC blocks. However, some experts disagree with the all-time high being such a noticeable event, stating that if Bitcoin miners join the game now, they have a mere five months to profit off from the current mining rewards.
However, the hash rate all-time high has also split experts on the opposite sides, regarding the correlation between computing power and Bitcoin’s price. Some experts believe the recent price spike was caused mainly due to Bitcoin recording an all-time high hash rate. Max Keiser stated his confidence about the correlation between Bitcoin’s hash rate and price, claiming that “BTC price follows hash rate, which is on a continuous 9-year bullish run.”
On the other side are the experts, linking Bitcoin with global market forces like supply and demand, rather than computing power. Alex Kruger tweeted his disagreement with hash rates defining Bitcoin’s price, explaining that “hash rate follows the perceived mining profits.”
Pricewise, Bitcoin’s swing above $9,000, as well as its later correction, indicates a stiff resistance at $8,750. Indicators like the Relative Strength Index, or RSI, show that the upward momentum could stall in the near future. Bitcoin’s price most likely would drift sideways, between the strong support and resistance zones at $8,500 and $8,750, respectively. As of press time, the world’s largest cryptocurrency is trading at $8,630.51.