At the time of writing, the king of cryptocurrencies is finding buyers at $26,000. However, the cumulative volume of crypto has decreased to $14 billion. The lack of interest has led to significant sideways movement in price over the weekend. On the other hand, Bitcoin miners have set a new record. So, will this have an impact on the price?
Despite the decline in price, Bitcoin miners are increasing their activities with about 6 months left until the halving. Mining activities of Bitcoin provide vital clues about the network’s health and profitability in the mining sector, and are constantly monitored by experts in the crypto ecosystem. According to the on-chain analysis company Glassnode, the network hash rate reached its highest level in the last 4 months on August 26. The previous 4-month peak was recorded more than a month ago on July 7.
The increase in hash rate is an extremely positive development for the security of the network. More active miners contribute to decentralization. The participation of more miners or the use of more efficient machines usually leads to an increase in this metric.
The jump in hash rate has pushed mining difficulty to an all-time high last week. Mining difficulty is automatically adjusted approximately every two weeks to keep the total block time at 10 minutes.
Analysts from Bitfinex have revealed that the increase in mining difficulty is due to miners’ expectations of a rise in Bitcoin price. Miners are among the largest investor groups, and their market history is much older than that of an average investor. Experience, knowledge, and advanced analytical capacity give hope to investors at this point.
In their recent evaluation, analysts said:
“Miners can be sure that the price of Bitcoin will eventually recover. This deviation can be seen as just a deviation from its true value. Therefore, making more resource investments to mine Bitcoin at these prices can be quite profitable for them.”
Analysts also pointed out that miners are delaying the sale of their assets due to their belief in the growth potential of BTC. Glassnode’s data supports these views. We can see that the total supply held in miner addresses reached a high level of 1.83 million as of August 26.
It should be noted that miners often make cash outflows to cover mining and energy costs. The delay in liquidations typically indicates their expectation of further strengthening of the Bitcoin price.