- The Bitcoin hash rate has also fallen significantly as a result of the collapse of the Bitcoin price.
- The Bitcoin Halving could reinforce this trend and put further selling pressure on the price. However, there is also hope.
The Bitcoin Halving, which will take place in May and will reduce the block reward for Bitcoin miners from 12.5 to 6.75 BTC, was considered a bullish event until recently. However, for many experts, Bitcoin’s deep plunge raises a number of questions behind this theory.
The concern of some analyses is that the Bitcoin Halving will further reduce the profitability of the miners. As a result, large mining companies could be forced to liquidate larger amounts of Bitcoin. This could theoretically create a significant selling pressure on the market.
The first signs that miners are leaving the Bitcoin network are already visible. As a result of the low Bitcoin price, some miners are apparently forced to stop their operations due to lack of profitability. According to data from Blockchain.com, the hash rate of the entire Bitcoin network has dropped from an all-time high of 133 tera-hashes per second (TH/s) to a 3-month low, around 95 TH/s.
When the Halving takes place in about two months, the profitability for Bitcoin miners will be even lower, which could cause even more miners to leave the network. On the one hand, this will reduce the security of the Bitcoin network, on the other hand, the pressure to sell from BTC miners could increase further. The spread of panic is nevertheless wrong.
Bitcoin Halving and hash rate as positive indicators
Despite the crash of the Bitcoin price, the hash rate of Bitcoin has by no means plummeted massively. This could indicate that the large mining companies did not capitulate in the midst of the price collapse. In addition, the continued solid hash rate shows that miners continue to have confidence in the long-term price trend of Bitcoin.
In a video on Bitcoin Halvings from late 2019, prominent analyst Andreas Antonopoulos stated that even if there were a mass exodus of miners, with 9 out of 10 leaving the network, it would still be safe. The miners who remain in the network will be rewarded for their trust and will be much more profitable. In addition, “Bitcoin could run today with one-tenth of the mining power and be very very secure without any problems,” Antonopoulos continued:
How do I know? Well, we had one-tenth of the mining power year and a half ago. It was very very secure then. So nothing really happens when the block subsidy runs out, nothing really happens when the halving happens, nothing happens if a bunch of miners turn off their equipment other than a slight delay in block issuance which then gets adjusted in less than two weeks. This is a dynamic system that is constantly adapting to change
In line with Antonopoulos’ argumentation, Bitcoin Halving remains a bullish event, reducing the amount of newly produced Bitcoin and thus causing a shortage of supply. However, as CNF has reported, the “black swan”, the coronavirus, is an event that nullifies all fundamental data and historical trends.
At the moment, therefore, all eyes seem to be on the global stock market. A correlation between Bitcoin and the stock exchanges in Europe and the USA are currently obvious. The panic surrounding the coronavirus pandemic on the stock markets has probably also led to a sell-off on the crypto market. Therefore, the likelihood of a recovery of the Bitcoin price and the altcoins currently seems to depend on the progress made in stopping the coronavirus as well as on the signals from the global stock market, rather than the Bitcoin Halving.