A renewed drop in mining difficulty could cut Bitcoin’s price by 10%

In the past, a sharp drop in mining difficulties was followed by a drop in Bitcoin prices. This was seen on May 20 when the level of difficulty decreased by 6%Bitcoin could have more room for declines as mining difficulties decrease for the second time since halving.Bitcoin mining difficulty adjustments take place every 2016 blocks or every two weeks. You determine the effort of the miners to confirm transactions before adding them to the blockchain.Bitcoin’s difficulty level could drop by up to 10.25% with today’s adjustment, which could potentially lead to a further drop in Bitcoin price.According to Sasha Fleyshman, a trader at the Arca investment firm, today’s adjustment would be “the second straight downward correction in a row” since the bitcoin halving on May 11, 2020.

 

Short-term correction

Historical charts show that significant fluctuations in mining difficulties have always led to short-term downward trends in the Bitcoin price. This means that the top cryptocurrency is likely to go down in the coming days. Because it is easier for miners to mine bitcoins.A decrease in the level of difficulty gives mining pools with the most modern mining equipment the opportunity to increase their mining efficiency and to sell miners with less efficient machines.Such a case is known as surrender and was responsible for a price drop in December 2018 when the levels fell three times in succession, initially by 7.39%, then by 15.13% and finally again by 9.56%.