Bitcoin Price and Hashrate Divergence May Set the Scene for a Potential Rally, Historical Data Shows

As a researcher studying the dynamics of Bitcoin, I’ve noticed that significant divergences in its price patterns have occurred infrequently over the past three years. Interestingly, these instances have often seen Bitcoin reaching a temporary low, which is then followed by a surge as the market adjusts to an increase in the network’s hashrate. The fluctuations in the Bitcoin network’s hashrate are directly tied to the number of miners who are actively validating transactions by running their mining computers.

As an analyst, I’ve observed a notable factor fueling the recent spike in hash rate: the escalated activities of publicly-traded Bitcoin mining companies. Prior to the halving event, which reduced bitcoin rewards by half, the hash rate skyrocketed to 650 Exahash per second (EH/s), only to dip down to 550 EH/s in June due to less efficient miners leaving the network amidst heightened competition. However, the hash rate has since rebounded to its pre-halving levels, a trend I attribute to these publicly-traded mining companies, which are financially robust, significantly increasing their presence by boosting their computing power.

Based on data from sixteen publicly traded companies, it appears they are very close to holding approximately 23% of the market in production – the highest percentage since at least January 2023, according to TheMinerMag industry journal. It’s plausible that these miners will likely increase their control over the hash rate as they strive to remain profitable following the halving event, by intensifying competition among themselves.

Counter-seasonal trend

Historically, September is often referred to as a bearish month for Bitcoin, typically seeing an average drop of 4%. However, contrary to this trend, Bitcoin has seen a 7% increase this year. This unexpected upward trend might suggest that due to the lower Bitcoin price and increasing hashrate, the price could be catching up with the hash rate, possibly leading to another rally. Keep in mind that other market factors such as interest rate decisions can also influence this price shift.

Furthermore, the upcoming difficulty adjustment on September 25, projected to decrease by 5%, might signal that prices are starting to match their actual value. At present, blocks are being mined approximately every 10.5 minutes, based on data from mempool.space. This could suggest a possible reduction in the hash rate as the price adjusts accordingly.

Miners accumulating

An additional indicator suggesting a possible increase in cost might be the actions taken by miners regarding the bitcoins they’ve mined themselves.

According to Glassnode’s analysis, from November 2023 to August 2024, miners were compelled to offload their bitcoins for operational expenses because of the halving event. This prolonged selling period was among the most sustained instances of such pressure ever observed in Bitcoin history.

Over the last month, miners have been amassing Bitcoin in their digital wallets, indicating that the challenging period following the halving may be easing up. As miners produce fewer new Bitcoins for circulation, it could lead to a decrease in supply and potentially boost the market price.