Bitcoin’s ($BTC) recent price surge has excited many investors, but a key trend in mining activity suggested not everyone is confident the rally will last.
The Bitcoin hashrate, which measures the computational power miners use to secure the network, has fallen recently. This comes after hitting a record high of 755 million terahashes per second (TH/s) earlier this month.
Miners use powerful computers to process Bitcoin transactions and earn rewards. When the hashrate rises, it usually means miners are optimistic and increasing their operations.
However, a drop in this number suggests some miners are turning off their machines, possibly because mining is no longer profitable for them.
Right now, the hashrate is about 723 million TH/s, down by more than 4% from its peak. This drop is surprising because Bitcoin’s price has been climbing.
It is currently around $91,900, up more than 6% in the past week. Typically, higher prices bring more miners to the network because their rewards in dollars increase.
Experts believe the drop in the hashrate could mean that miners expect the current rally to slow down. Despite Bitcoin’s growth, some signs suggest the market could face challenges in the near future.
Breaking records
Bitcoin’s price increase has not only attracted more attention but also helped it rise on the list of the world’s largest financial assets.
Last week, Bitcoin reached a new all-time high price of $93,477, according to data from CoinGecko. This surge brought Bitcoin’s market capitalisation above $1.8 trillion for the first time.
The rally also helped Bitcoin surpass Silver and Saudi Aramco to become the world’s seventh-largest asset.
It is now competing with major companies like Apple, Microsoft, Nvidia, and Amazon, as well as gold.
Bitcoin’s recent growth has been particularly impressive. It gained 39.5% after the US presidential election, climbing from $66,880 to its current highs.
Analysts say this surge represents the largest nine-day price increase since January 2021.
Bitfinex, a cryptocurrency exchange, said the rally required a huge amount of money to fuel such growth. “In January 2021, Bitcoin’s market capitalisation was just $450 billion”, the company explained.
“It takes much more capital to drive similar price changes today. This recent rally likely represents one of the largest inflows of money into Bitcoin in history”, added Bitfinex.
Could Bitcoin reach $1 million?
With Bitcoin’s price continuing to climb, many experts are predicting where it could go next. Some believe Bitcoin will hit $100,000 by the end of November.
Others, like VirtualBacon, a well-known cryptocurrency analyst, think it could reach $200,000 soon. Looking even further ahead, there is talk of Bitcoin reaching $1 million within the next 10 years.
This bold prediction is based on Bitcoin’s unique features. Unlike traditional assets like gold or stocks, Bitcoin has a fixed supply of 21 million coins. Its limited availability makes it a scarce asset, which increases its value as demand grows.
Bitcoin is often called “digital gold” because it offers a way to store wealth without being affected by inflation. As more people and institutions invest in Bitcoin, its price could continue to rise.
VirtualBacon points out that Bitcoin currently holds only 0.35% of global wealth. If this grows to just 3%, its market capitalisation could reach $20 trillion, pushing the price to $1 million per coin.
Institutional investment is also playing a big role. Bitcoin exchange-traded funds (ETFs) have attracted billions in investments, and companies like Microsoft are considering adding Bitcoin to their treasuries.
VirtualBacon explained that Bitcoin does not even need to surpass gold’s market value to reach this milestone.
“If Bitcoin captures just 57% of gold’s future value by 2034, its market cap could hit $20 trillion, and its price would reach $1 million”, he said.
However, experts caution that Bitcoin is not about making quick profits. Its real value lies in long-term growth.
As its adoption continues, Bitcoin is becoming an important part of the financial world, offering significant potential for investors over the next decade.
