Cryptocurrency analyst James Van Straten sees a potential silver lining for Bitcoin, suggesting a divergence between its price and hashrate could be setting the stage for a rally.
Hashrate refers to the total computing power of the Bitcoin network, and according to Van Straten, historical data reveals that such divergences have often preceded price increases.
“These divergences have occurred only a few times in the past three years,” Van Straten noted. “In some cases, Bitcoin prices have reached a local bottom during these events, followed by a rally as the market catches up with the rising hash rate.”
Hashrate fluctuations occur as miners adjust their operations based on profitability. In July, the hashrate started to climb and reached an all-time high of 693 exahashes per second (EH/s) in early September, while the price remained near $54,000.
Van Straten attributes the recent hashrate surge to the activity of publicly traded mining companies, which have increased their market share due to their financial backing.
“Data from sixteen public companies show that they have almost reached a 23% market share in production, the highest since at least January 2023,” he said.
Historically, September has seen average price declines for Bitcoin. However, this year is defying the trend with a 7% increase so far. This, combined with the rising hashrate, suggests a potential correction upwards.
“The lower Bitcoin price and rising hashrate could indicate the price catching up, potentially setting up for another rally,” Van Straten explained. “Of course, other market factors such as interest rate decisions could also influence price changes.”
The upcoming difficulty adjustment on September 25th is also a point of interest. Projected to decrease by 5%, it could further suggest that prices are catching up with the hashrate.
