Bitcoin's Bear Market Pains: Declining Hash Rate or Healthy Network?
The Bitcoin market has been a disappointment for author Will Clemente, who shifted his focus to commodities last year due to oversupply issues in the crypto space. He had expected Bitcoin to perform well at the end of 2022, given gold's strong rally and small-cap stocks' surge, but it only made a failed breakout.
In January this year, Clemente reduced his remaining Bitcoin exposure as the market performance resembled the previous bear market in 2022. This year's bear market has been milder in terms of percentage drop from highs, but more difficult to endure due to lack of clear reasons for decline, unlike in 2022.
Clemente notes that digital asset treasury and quantum computing risks have shown signs of repair, but Bitcoin ETFs saw a net outflow of $5 billion over the past year. In contrast, DRAM-related products attracted $10 billion in funding within a month.
When discussing Bitcoin's fundamentals, Clemente emphasizes the importance of network health, which he believes remains decentralized and healthy despite declining total network hash rate. He attributes this to nodes being spread across the globe and many more likely not easily traceable.