Since last year, Bitcoin’s hash rate, or the amount of computing power used to create new coins, has steadily increased as it tries to catch up with the bitcoin price.
The sudden and surprising increase in the bitcoin price, which went up from $1,000 early last year to almost $20,000 by December, resulted to a huge growth of new crypto miners lending their computing power to the bitcoin network.
And yet even with bitcoin’s price drop in 2018, the hash rate continues to grow and has even increased to over 100% in the last four months. The bitcoin price, however, has slumped by a third in the same period.
Even though it takes a lot of time for miners to add their computing power to the bitcoin network when the price increases, the bitcoin hash rate does not decrease if even when the price falls. This simply suggests that miners are not turning away from bitcoin just yet.
Bitcoin’s price has been on a downward trend for the past few months, but investors need not worry as a consistently increasing hash rate indicates a good outlook for the bitcoin price in the long-term.
On the other hand, bitcoin bulls have been talking up the price of bitcoin this week.
In an interview with Bloomberg, Thomas Lee of Fundstrat Global Advisors predicts that bitcoin will hit $25,000, or more than 270% its current price, by the end of the year.
Bitcoin’s functionality remains one of the biggest factors for their faith in the cryptocurrency.
“If you want to own the asset that you can actually use today and that people are functionally using, it’s bitcoin,” Bart Smith, head of digital asset at trading giant Susquehanna International Group, told CNBC.
Meanwhile, TenX president and co-founder Julian Hosp said bitcoin’s price has the potential to hit $60,000 despite the fact that the cryptocurrency is trading around 67% below its peak price December last year.
“If we see over $10,000 by the end of August, we can see the $20,000, then the press, the media is going to come in, and we can still see the $60,000 this year,” Hosp said. “I predicted for 2018, we’re going to see $5,000 and $60,000. So $5,000, we pretty much hit it, so let’s see if we can do the $60,000. I’m still quite confident.”
Not everyone agrees with Hosp’s sentiment, though.
Nobel Prize-winning Joseph Stiglitz said earlier this week that digital currencies would be “regulated into oblivion” and that bitcoin would only be worth “$100 in 10 years”.