Bitcoin fundamentals drop may delay $14K

Bitcoin could see further downward price pressure this week as network difficulty is set to drop the most in five months.

The mining difficulty is an essential measure of the competition among miners in finding block subsidies, and by extension, the overall health of the mining sector.

Automatic readjustments meanwhile fulfil an even more important function, allowing Bitcoin to sustain itself regardless of price action or other circumstances.

In June, difficulty dipped 9.3%, following a previous 6.3% decrease, which marked the culmination of miner upheaval after Bitcoin's block subsidy halving event in May. The halving cut the block subsidy by 50%, which produced a drastically different profit dynamic for miners operating on tight margins or with older equipment.

The two consecutive downward adjustments opened up opportunities for less-efficient miners once again, and difficulty corrected upward by almost 15% thereafter.

The latest fall has been attributed to the end of the so-called "Hydro season" for Chinese miners.

The knock-on effect, coming at a time when Bitcoin tried and failed to crack $14,000 resistance for the first time in almost 18 months, may be a longer withdrawal from that essential level.

"Rainy season ended in china -> increased energy prices for hydro -> hash rate falling as miners transition to cheaper power -> blocks mined less frequently until difficulty adjustment."

Odell was discussing another result of reduced miner activity - larger Bitcoin transaction fees, which have spiked almost 200%. After June, price action slowly fell in line with both difficulty and Bitcoin network hash rate.

Zooming out, Lina Seiche, managing director of Bitcoin media outlet BTC Times, drew attention to hash rate's overall strength.