Post-Halving Trends: Is History Poised to Repeat Itself?

Bitcoin’s price briefly dipped below $60K but hasn’t entirely broken down, despite ETF demand drying up. Explore whether the current decline in network hashrate signals a larger trend. After witnessing the biggest decline in difficulty since December 2022, can we expect more downward adjustments? Hashprice remains hovering at $50/PH/Day levels. How long did it take for hash price to recover after the 2020 halving? Uncover whether these dynamics align with market expectations in this week’s captivating mining economics rundown.

  • Bitcoin Price Holding On

  • ETF Demand Drying Up

  • Network Hashrate Showing Weakness

  • Post-Halving Difficulty Adjustments Compared

  • Tx Fees Continue to Fall

  • Hashprice Stays Low

  • ASIC Market

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Bitcoin Price Holding On

Since reaching its all-time high of almost $74,000 in mid-March, Bitcoin has been on a downward slide. At the start of this month, BTC even closed below the $60,000 mark. However, it did recover in the following days and managed to maintain a position above that level for the rest of the month.

On May 1st, Bitcoin dipped to $56,500. This pullback, following the significant surge, amounted to a decline of 23.4%. While notable, such retracements are not uncommon for BTC, which has experienced similar movements several times since its ascent from the lows of November 2022. In March 2023 and January of this year, Bitcoin also saw pullbacks exceeding 20%.

Bitcoin has been tracing a descending parallel channel on the daily chart. To reverse this downward trend, BTC must sustain levels above $60,000 and eventually surpass the $64,000 mark to establish a higher high.

Source: TradingView

ETF Demand Drying Up

The strong demand for spot ETFs after their launch was a significant driver behind the price move from $40k to $75k. However, in the week following the Halving event, ETF holders began selling, leading to a record streak of seven days with net outflows. The recovery of BTC price on March 2 resulted in a net inflow the next day, putting an end to the record streak of outflows. After two strong days, the inflows started cooling off again. It is likely that unless BTC shows bullish price action again, ETF demand will remain low.

Source: heyapollo.com

Network Hashrate Showing Weakness

The network hashrate reached an all-time high of 654 EH/s on the 7-Day Moving Average (DMA) just a day before the halving event. In the three weeks following the halving, the network hashrate declined all the way to 580 EH/s, marking a drop of 74 EH/s or 11.3%.

This might seem like a lot, but such a decline is not out of the ordinary. In 2024 network hashrate has showed declines of similar magnitude in two occasions.

Source: Lincoin Lens

When comparing the drop in hashrate to the previous halving, the current decline appears quite moderate percentage wise. In May 2020, the network hashrate fell by a total of 30 EH/s (from 120 EH/s to 90 EH/s). The current drop of 74 EH/s is almost 2.5 times larger in nominal terms.

Source: Digital Mining Solutions

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Post-Halving Difficulty Adjustments Compared

After the 2020 halving, the hashrate dropped by 25.3% within 10 days. This led to two downward difficulty adjustments of -6% and -9.29%. However, hashrate recovered in a V-shape, returning to pre-halving levels within 39 days after the event. This speedy recovery resulted in increases of 14.95% and 9.89% following the two negative adjustments. Within two months after the halving, the difficulty marked a new all-time high.

Source: Digital Mining Solutions

Since the 4th halving on April 14th, there have been two difficulty adjustments: +1.99% and -5.62%. The first adjustment occurred a few days after the halving when transaction fees were still elevated, and the hash price was around $90/PH/Day. Ten days after the halving, hashprice dropped to historic lows, and the network hashrate began to decline. This resulted in a network difficulty of -5.62% on May 9th, the largest negative difficulty adjustment since December 2022.

With the drop in network hashrate slowing down, it remains to be seen if there will be a consecutive decline in difficulty like we saw after the 2020 halving.

Tx Fees Continue to Fall

On May 5th, 800 weeks and one day after Bitcoin launched on January 3, 2009, the one billionth on-chain transaction was processed. In total, across these 1 billion on-chain transactions, the Bitcoin network has processed $43 trillion worth of transactions. And 75% of that $43 trillion was processed only since 2021.

While this milestone is very exciting, the current transaction fees are not. The average transaction fees in USD have dropped all the way to $2.38. This level was last seen in November last year.

Source: CoinMetrics

Hashprice Stays Low

The -5.63% difficulty adjustment pushed hashprice back above $50/PH/day, and it has been floating around that level for a week now. As long as Bitcoin does not make any significant moves, hashprice is likely to stay in this range.

Source: Lincoin Lens

How long will these low margins sustain? Following the 2020 halving, hashprice experienced a notable decline, dropping from $160/PH/day to $73/PH/day, representing a decrease of 54%. Subsequently, hashprice remained at a lower level for approximately six months. However, it rebounded to pre-halving levels once Bitcoin price surged to new all-time highs towards the end of 2020. If history is any indication, hashprice could stay at these lower levels for multiple months.

Source: Lincoin Lens

The forward curve, also known as the futures curve, illustrates the relationship between the price of forward contracts and the time to maturity of those contracts. Below is the forward curve published by Luxor, which includes both hashprice ($/PH/Day) and hashvalue (BTC/PH/Day). The vertical axis represents the price change of a forward contract, while the horizontal axis measures the time to maturity. Looking at the forward curve of this week, the market is also pricing in the current low levels of hashprice for the coming five months.

Source: Luxor Technologies

ASIC Market

Used ASICs, with an efficiency of 30 J/TH and up, have been falling in price since April. With hashrate coming offline, it is likely that this trend will continue as miners try to sell their retired hardware.

Prices for ASIC models with sub-25 J/TH efficiency have remained virtually unchanged, suggesting that mining equipment is bottoming out. Machines with an efficiency under 25 J/TH are priced around $12/TH for over a month now.

Last week Luxor Technology had an interesting scoop. Apparently Bitmain will discontinue the Antminer S19K Pro. The largest ASIC hardware manufacturer will prioritize the production of the S21 model.

At Bitcoin Asia 2024, Canaan launched the Avalon Miner A1566, boasting a 185 TH/s hash rate with a power consumption of 3420W. With an 18.5 J/TH efficiency, it is Canaan’s most advanced miner.

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