Bitcoin network fundamentals remain strong despite a recent drop in Bitcoin price. On-chain data confirms that the mining difficulty has reached new all-time highs, indicating that miners are not deterred by the price downturn.
The latest biweekly automated readjustment on August 22nd saw a 6.17% increase in difficulty, making it the sixth-largest uptick of 2023. Difficulty is a measure of both miner competition and network security, suggesting that miners are still profitable. The next readjustment is expected to continue the upward trend, taking difficulty over 56 trillion for the first time.
The hash rate, which represents the estimated hashing power deployed by miners to the Bitcoin blockchain, is also showing confidence in BTC. While the exact figure is difficult to calculate, the hash rate is already challenging previous all-time highs of over 400 exahashes per second (EH/s). This demonstrates the security and reliability of the network.
MAC_D, a contributor to the on-chain analytics platform CryptoQuant, highlighted the increased network security and reliability despite the price decline. In a market update, he mentioned that the hashrate for BTC showed higher figures during the decline, indicating active participation from miners. Additionally, the staking rate for ETH increased, even though the price fell. This suggests that investors have high confidence in the security and reliability of both BTC and ETH networks.
Separate data from Glassnode, an on-chain analytics firm, shows that there hasn’t been a significant change in the amount of BTC held by mining entities. As of August 22nd, mining entities hold just over 1.83 million BTC, representing a steady increase of 0.08% since the start of the month.
These strong network fundamentals indicate that despite the recent drop in Bitcoin price, the underlying infrastructure and participation in the network remain robust. The increasing difficulty and hash rate demonstrate the continued interest and support from miners. The steady accumulation of BTC by mining entities also suggests confidence in the long-term value of the cryptocurrency.
It is important to note that this article does not provide investment advice or recommendations. Investors should conduct their own research and analysis before making any investment decisions.