Cryptocurrency analyst James Van Straten has shared his views on Bitcoin’s (BTC) price movements, arguing that it points to a potential rally driven by the divergence between the price and the hashrate, the total processing power of the network.
According to Van Straten, such divergences have historically signaled a market recovery, with Bitcoin often rallying by catching up to the rising hashrate after prices hit a local bottom.
“Historically, these divergences have only occurred a few times in the last three years,” Van Straten said. “In some cases, Bitcoin price has reached a local bottom during these events, followed by a rally as the market caught up with the rising hash rate.”
Consistent with this trend, Bitcoin has rebounded from its local low of $54,000 on September 6, gaining nearly $9,000, or 15%. The divergence between Bitcoin’s price and hashrate began in July and continued into early September, when the network’s computing power reached an all-time high of 693 exahashes per second (EH/s) on a seven-day moving average. Meanwhile, Bitcoin’s price has stagnated around $54,000.
One of the key factors behind the increase in hashrate is the increased activity of publicly traded mining companies. Before Bitcoin’s halving, a process that cuts mining rewards in half, hashrate peaked at 650 EH/s, but fell to 550 EH/s in June as less efficient miners exited the market due to increased competition. However, well-capitalized public mining firms have increased their activity, bringing the hashrate back to pre-halving levels.
According to TheMinerMag, public miners currently hold around 23% of the total Bitcoin production market share, the highest share since January 2023. Van Straten expects this trend to continue and for these miners to take a larger share of the network’s hashrate as they attempt to remain profitable post-split.
While September has historically been a bearish month for Bitcoin, with an average decline of 4%, Bitcoin has defied expectations this month by rising 7%, according to data from Coinglass. This seasonal trend, combined with the ongoing divergence between price and hashrate, could signal that Bitcoin’s price is preparing to catch up with hashrate, potentially paving the way for a rally.
Van Straten also noted that the next Bitcoin difficulty adjustment, scheduled for September 25 and projected to decrease by 5%, could further support the theory that price is catching up with hashrate. Blocks are currently mined every 10.5 minutes on average, suggesting a potential slowdown in hashrate growth as prices rise.
However, Van Straten warned that external market factors such as interest rate decisions could also play a role in catalyzing further price movements.
*This is not investment advice.
