It took precisely one year for bitcoin’s hashrate to look like the price with its parabolic rise and now the plunge, down 50% from 60 exahashes to 30.
That suggests people expected the price to continue increasing even while it was falling, so for much of the year they invested in new asics.
Now it appears they have realized that perhaps there is such a thing as maybe it doesn’t rise. It can fall too and, as we’ve seen, by quite a lot.
It is more probable, however, that they simply can’t afford any longer to keep the asics running, certainly not at a difficulty of 60 exahashes.
Ethereum too has seen quite a significant drop, from 300 terahashes to now 180 or so, with it somewhat stable or rising for much of the year even as price kept falling.
So the bear market is starting to bite now almost exactly one year on since all time high. The question is for how long, with the answer unknown.
As far as the network is concerned these hashrate fluctuations are irrelevant because of difficulty adjustments that keep the network running as it does now even if there was only one person mining with CPU on his/her laptop.
Bitcoin has recently seen the second biggest downwards difficulty adjustment in its decade long story. The biggest was in 2011 at -18%. Now it recently fell -15%.
Meaning miners are no longer selling bitcoin to buy new hardware or to expand, to hire new employees and so on.
So practically speaking new supply might have or is decreasing, but the other side of the equation is of course demand. Where the two meet is the billion dollar question.
We won’t know the floor until way after the event. Just as we didn’t know we were in a bull market until the November and December craze and just as we didn’t know we were in a bear market until a month or two ago.
One does kind of have a feeling about these things, however, but that’s easily dismissible as in a bear market you’d say it could go further down and in a bull market you’d say it could go further up, it’s just a dip.
And it is, until it isn’t. Then it becomes a plunge and you’re left holding the bag in crypto or in fiat depending on bull or bear bag.
Obviously if people didn’t sell, then you’d think at some point demand would rise above supply. Some however will sell the bottom, and then there will be no one left to sell.
Unless this really does go to zero, but even at zero 1 eth is still 1 eth. It’s same for bitcoin apparently. That piece of string is still rare and scarce even at 0.
Between here and zero there’s plenty of space, just as it may be that perhaps there is no more room to go down. Which is which, we will wait and see now as 2019 nears.