- Several reports have disclosed that miners are barely making profits forcing them to sell more coins to cover their operation costs.
- According to CryptoQuant CEO, Ki-Young Ju, this is the time for them to decide whether they will stay or leave.
The Bitcoin price is currently hovering a little below $21,000 as the asset is struggling for a rebound. Interestingly, reports have disclosed that the effort of the digital asset to get back to the top is largely offset by the occurrence of the miner “capitulation event”. Several reports have disclosed that miners are barely making profits forcing them to sell more coins to cover their operation costs. Arcane research recently reported that a significant amount of Bitcoins are currently leaving miners’ wallets.
In the first four months of 2022, public mining companies sold 30% of their bitcoin production. The plummeting profitability of mining forced these miners to increase their selling rate to more than 100% of their output in May.
In addition, Bitfarms, one of the leading Bitcoin miners has in the last couple of weeks sold 3,000 Bitcoins for $62 million. This was meant to boost its liquidity. The recent miner “capitulation event” was confirmed by Coin Metrics, who estimated that miners have sold more than $500 million worth of Bitcoin this month.
On-chain data demonstrate a miner capitulation event that has occurred, which has typically preceded market bottoms in previous cycles. (by @jjcmoreno)
Read More ? https://t.co/T8t4o9DIGL
— CryptoQuant.com (@cryptoquant_com) June 24, 2022
Bitcoin Hash Ribbons has also flipped to capitulation, indicating that some miners have stopped mining as their block rewards cannot make up for the cost. This, according to Julio Moreno, senior analyst at on-chain data firm CryptoQuant, indicates that Bitcoin’s bottom is possibly due. This is based on historical patterns which show that capitulation events precede the final stage of the Bitcoin sell-off.
Our data demonstrate a miner capitulation event that has occurred, which has typically preceded market bottoms in previous cycles.
Buyers still directing the Bitcoin market?
Regardless of the situation, most Bitcoin miners remain active. It was observed that network fundamentals have dropped slightly from an all-time high of 30 trillion. According to CryptoQuant CEO, Ki-Young Ju, this is the time for them to decide whether they will stay or leave. He further hailed the arrival of whales stating that the average outflow from Coinbase has hit a 9-year high. The same can also be said of average inflows.
Trader and analyst Rekt Capital, however, noted the dominance of buyers stating that bears are still in direct control of the market.
Current BTC buy-side volume following the extreme sell volume spike is still lower than the 2018 Bear Market buyer follow-through volume levels at the 200-week MA. Let alone March 2020 buy-side follow-through.
Experts further explain that the decrease in hash rate causes the network to lower its mining difficulty. However, the network can only reach equilibrium with miners after some time as difficulty adjustment happens every two weeks. The last time it happened was June 22. This, coupled with the forced selling of miners could negatively affect any recovery for Bitcoin.
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