Bitcoin hash rate suddenly drops by 20%, releasing a key signal: Hash rate indicates a precursor to BTC price rebound

January 27 News, as Bitcoin miners cut unprofitable mining activities due to rising costs, an on-chain indicator called the “Hash Band” has once again entered the market’s view, being regarded as an important signal for a potential rebound in Bitcoin’s price. Recently, storms across various parts of the United States have affected some mining farms’ operations, coupled with rising electricity and operational costs, forcing miners to shut down some equipment, leading to a significant decline in total network hash rate.

Data shows that the Bitcoin network’s hash rate has dropped from approximately 1.2 ZH/s to about 950 EH/s, a decline of nearly 20%. This suggests that the next mining difficulty adjustment is expected to decrease by about 17%, the largest drop since China’s crackdown on mining in 2021. For the market, this contraction in hash rate is often seen as a sign of the “miner capitulation” phase.

The so-called Hash Band is an indicator constructed based on the 30-day and 60-day moving averages of hash rate. When the short-term moving average falls below the long-term moving average, it indicates that miners are under profit pressure and beginning to exit; when the short-term moving average crosses back above the long-term average, it suggests that the most difficult phase may be over. Historically, this signal has appeared multiple times near Bitcoin’s important lows.

For example, in mid-2024, when hash rate sharply declined and combined with the unwinding of yen arbitrage trades, Bitcoin briefly dipped to around $49,000 in August, then rebounded to $100,000 in early the following year. Earlier, during the 2022 FTX turmoil, miners shut down en masse, and Bitcoin bottomed around $15,000. After the Hash Band recovered, the price rose back above $22,000.

In late November 2025, the Hash Band also issued a similar signal when Bitcoin stabilized near $80,000; now, the price has returned to around $88,000. On-chain data indicates that as hash rate declines and difficulty is about to be adjusted downward, miners’ profit environment is expected to improve, which usually alleviates selling pressure and restores market sentiment.

The current market focus is whether Bitcoin will enter a new expansion cycle as hash rate and the Hash Band gradually recover. If historical patterns repeat, the recovery phase after miner capitulation often provides a more attractive entry window for medium- to long-term funds.