Max Keiser tweeted earlier this month that “Price follows hashrate and hashrate chart continues its 9 yr bull market.”
His argument stems from the fact that an increase in the Bitcoin hash rate makes the network more secure, boosting investor confidence and driving up demand. On that basis, Keiser believes that price is trying to reflect the network fundamentals.
The hash rate or computing power of a cryptocurrency is a measure of the number of calculations that can be performed by a network each second. So, higher hash rate implies that miners are increasing the level of competition among themselves to validate new blocks.
Furthermore, higher hash rate makes it difficult to perform a 51% attack, making the network stronger.
The series of new records made all through this summer is a bullish signal, with both analysts and traders surprised by the strength of the network. The halving of Bitcoin, a pre-coded 50% decrease of block rewards for miners, is less than a year (May 2020) away.
Usually, halving of blockchain rewards boosts coin’s value due to scarce availability. However, there are concerns that in case of Bitcoin, a decline in rewards may discourage miners and negatively impact the network’s computing power.
Earlier this summer, Litecoin (LTC) developer Charlie Lee had predicted a jolt to the coin’s mining network, after mining rewards decrease by 50%. However, no such thing happened and the network continues to remain strong as usual.