Bitcoin’s price drop has spooked many investors as they may question their investment strategy and the health of their portfolio. For his part, investment analyst Anthony Pompliano claims that while Bitcoin’s price performance looks worrisome, Bitcoin and Bitcoin miners “don’t care.”
However, this is a rather simple analysis, since the situation is much more complicated.
A Bitcoin crash or just a roadblock?
In an episode of his show business, Pompliano stated,
“Bitcoin hash rate continues to hit all-time highs. Countries have been trying to get rid of them. No one cares. Price goes down. No one cares.”
However, looking at recent hash rates allows us to discern nuances of this statement.
Source: Glassnode
While Bitcoin’s average hash rate has indeed reached an all-time high, this comes after frequent increases and decreases. In fact, from January 21st, one could see the average hash rate drop again.
Furthermore, the hash rate is not entirely immune to world events like mining bans and internet disconnections, potentially affecting miners.
Need more than one ray of light. . .
Emphasizing his point, Pompliano declared,
“Bitcoin’s monetary policy doesn’t care what’s going on in the world. It doesn’t care about the global pandemic, it doesn’t care about the Federal Reserve and it certainly doesn’t care who is buying and selling it.”
But while Bitcoin miners and other parts of the ecosystem may have recovered from past events that led to a drop in performance, “not caring” is a stretch. After all, the market is not in a state of extreme fear for no reason. And fear can trigger actions like panic selling.
A look at the Lightning Network could also show how the crash has affected other parts of the Bitcoin ecosystem. Again, it’s not just a case of good or bad.
Source: Glassnode
The takeaway here is that while LN capacity dropped dramatically around the time of the December 4 incident, the network recovered within a month. Additionally, while the number of nodes also decreased after January 10, the all-time high was soon reached again.
Overall, the Bitcoin ecosystem is interconnected, and price performance can affect other parts of the network.
We need to talk about Bitcoin
At press time, the king coin is changing hands at $35,818.88, having dropped 16.35% in the past week. As many might expect, President Nayib Bukele of El Salvador wasted no time before buying 410 Bitcoins for the country.
According to estimates, he bought each BTC at around $36,585. However, many experts are still not excited.