Bitcoin [BTC] undergoes the second largest difficulty adjustment in it’s history. The total hash-rate of Bitcoin mining also slips below ($75,000,000 Th/s); the lows attained during the bear capitulation in late 2019. Hence, returning to similar supply schedules; the low in Bitcoin’s price then was at $6400.
In terms of trading sentiments, however, a lot has changed the last four months. The deadline for halving is now closer than before (48 days left) and Coronavirus continues to create clouds of uncertainty.
Total Hash-Rate of the Bitcoin Network (Source)
Today, Bitcoin’s difficulty adjustment resulted in a 15.7% drop in the metrics. It is directly proportional to the hash rate, but resets after every 2016 blocks (about 2 weeks). It dropped to 13.9 T from 16.5 T, it was the highest difficulty levels recorded on the Blockchain. The drop is equivalently large. Dovey Wan, a crypto analyst and partner at Primitive Crypto tweets,
The LARGEST difficulty/harsh rate drops since ASIC time!
She adds that Bitcoin mining is profitable in the long-term as a call option which requires a lot of margin in the early stages. Hence, it is a highly capital intensive business. Moreover, as the weaker players are exiting the profitability for large miners is increasing as well. Wan notes,
Sell pressure from miners will decrease after the adjustment as total hash-rate drops, leaving miners with higher margin in the game
Presently, miners will be less motivated to sell large number of Bitcoins, as their share increases with a drop in hash-rate.