Mining difficulty could be an indicator for predicting BTC prices. All three of the major bull runs in Bitcoin’s history started after mining difficulty reached its bottom, meaning the market could see robust gains this year, says crypto researcher PlanB.
Predicting Bitcoin bull runs with mining difficulty
Despite being known for its incredibly high volatility, the crypto market moves in cycles. Crypto analysts use a variety of different tools and factors to predict how long with each cycle last and how much different factors will sway the market.
Moving averages are a favorite among analysts, as they’re able to offer a fairly accurate prediction of major price spikes. However, crypto researcher PlanB found a different, possibly more accurate way to predict Bitcoin’s price movement.
In a Twitter thread, the researcher explained how the past three major Bitcoin bull runs started when mining difficulty reached its bottom.
After each ATH #bitcoin price drops until a lot of miners aren’t profitable. Miners switch off hardware (capitulate), hashrate drops, and difficulty adjusts downwards .. until miners become profitable again and difficulty rises. Difficulty bottom (100%) starts a new bull market🚀 pic.twitter.com/IgriE3GkPq
— PlanB (@100trillionUSD) August 21, 2019
He explained that Bitcoin’s price dropped significantly each time mining difficulty reached an all-time-high, and continued to drop until a large percentage of miners became unprofitable. When Bitcoin’s price increases, and competition intensifies, many miners cannot keep their hardware going, forcing them to capitulate.
Profitable mining supposedly pushes Bitcoin’s price up
As miners leaving the network the network hashrate decreases. A decline in hashrate is followed by an adjustment in mining difficulty shortly afterward.
Over the past 10 years, each time Bitcoin mining difficulty reached its bottom a major bull run followed.