* In "bubble periods" (when Bitcoin's price is above the long-term trend), *difficulty* leads Bitcoin price.
* Three different statistical tests reach the same conclusion:
* *Granger Causality* – difficulty leads by approximately 4-6 weeks.
* *Transfer Entropy* – peak influence about 6 weeks before price.
* *Cross-Correlation* – highest correlation when difficulty leads by 9-12 weeks (with an additional peak around 4-6 weeks).
* In the "core" regime (when the price is near the power law trend), the relationship is reversed: price leads difficulty by about 4 weeks.
* **The Last 5 Years (May 2020 - May 2025):**
* The growth rate of difficulty has moderated (Power Law index \~6.3 compared to \~9.5 previously).
* Most difficulty adjustments were small (ratio < 1.1), weakening the statistical signal.
* *Cross-Correlation* and *Granger Causality* do not show significant leading behavior of difficulty over price.
* *Transfer Entropy* indicates only moderate influence, peaking at around 3 weeks, without strong statistical significance.
* **Main Conclusion:**
* Over most of the past decade, especially during bubble periods, difficulty adjustments provided an early signal for Bitcoin price increases by several weeks.
* In recent years, this relationship has significantly weakened; currently, difficulty is not a reliable indicator for upcoming price increases.
* It is possible that Bitcoin miners no longer increase activity ahead of market moves, or that the market has become more efficient and the signal has faded.
**Summary of the Article**
* **Period 2013-2025 (inclusive):**
* In "bubble periods" (when Bitcoin's price is above the long-term trend), *difficulty* leads Bitcoin price.
* Three different statistical tests reach the same conclusion:
* *Granger Causality* – difficulty leads by approximately 4-6 weeks.
* *Transfer Entropy* – peak influence about 6 weeks before price.
* *Cross-Correlation* – highest correlation when difficulty leads by 9-12 weeks (with an additional peak around 4-6 weeks).
* In the "core" regime (when the price is near the power law trend), the relationship is reversed: price leads difficulty by about 4 weeks.
* **The Last 5 Years (May 2020 - May 2025):**
* The growth rate of difficulty has moderated (Power Law index \~6.3 compared to \~9.5 previously).
* Most difficulty adjustments were small (ratio < 1.1), weakening the statistical signal.
* *Cross-Correlation* and *Granger Causality* do not show significant leading behavior of difficulty over price.
* *Transfer Entropy* indicates only moderate influence, peaking at around 3 weeks, without strong statistical significance.
* **Main Conclusion:**
* Over most of the past decade, especially during bubble periods, difficulty adjustments provided an early signal for Bitcoin price increases by several weeks.
* In recent years, this relationship has significantly weakened; currently, difficulty is not a reliable indicator for upcoming price increases.
* It is possible that Bitcoin miners no longer increase activity ahead of market moves, or that the market has become more efficient and the signal has faded.
It would be nice if you could also make the article accessible to laypeople with the help of artificial intelligence.
I somehow manage to understand what you're saying but only after a lot of help from ChatGPT - the o3 thinking model.