Does Bitcoin price follow hash rate? – Understanding the theory

The hashrate of the most capitalized cryptocurrency – Bitcoin (BTC) – has updated its absolute maximum (ATH). According to the founder of Heisenberg Capital, a well-known trader Max Kaiser, changes may be a signal for the coin’s rate to rise. He shared this assumption with the readers of his microblog in the summer of 2019. The BeInCrypto editors decided to test the viability of Max Kaiser’s theory.

In order to understand how the bitcoin rate is correlated with the hash rate, it was necessary to analyze the behavior of the coin at the moments when the indicator updated its historical maximum. A comparison of the BTC chart with changes in the cryptocurrency hash rate over three years is as follows:

The chart shows 33 ATH hash rates of bitcoin. They are marked with circles. Green – growth, blue – lateral movement, red – fall. Of them:
• In 19 episodes, the cryptocurrency rate went up.
• In 10 cases, bitcoin lost in value.
• In 4 episodes, the coin rate continued to move laterally.

It turns out that for three years, in 57% of cases, bitcoin went into growth against the background of updating the absolute maximum with a hash rate. In 30% of the ATH indicator fell on the period of the decline in the value of the cryptocurrency. Sideways, during the update of record hash rates, accounted for about 12%.

Let’s take a closer look at 2020. By shortening the time frame, time frames can be matched more accurately. For 9 months of 2020, the bitcoin hashrate updated its maximum value 8 times. Of them:
• In 5 cases, the cryptocurrency rate went up.
• In 3 episodes, against the background of the ATH hash rate, bitcoin lost in value.

It turns out that the coin during 2020 in 62% of cases went into growth during the periods of renewal of the maximum hash rate. The fall accounted for about 37%.

It turned out that in most cases, the ATH of the bitcoin hash rate is followed by the growth of the cryptocurrency. At the same time, frequent episodes of a fall in the exchange rate of a coin, against the background of an indicator update, do not allow us to talk about the high accuracy of the theory.
Recall that most of the bitcoin hashrate is concentrated in China. At the same time, Russia is in second place. Researchers believe that the coin could squeeze the PRC in the BTC mining market.

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