Bitcoin Is Not Ready To Roar: Hash Rate Plunging As Speculators Keep Off
Bitcoin (BTC) might be steadily rising, but Bitcoin miners appear to be under immense selling pressure and still dumping coins post-halving.
Bitcoin finds itself in a difficult position. After last week’s deep losses, which forced the coin to multi-week lows and discouraged it from reaching critical support levels, prices are firm and recovering.
However, not all analysts are convinced. They are pessimistic about price action and prefer to cite on-chain developments, especially the impact of miner capitulation, the German dump (at least in recent days), and how institutions are reacting to this.
Thus far, Bitcoin is bearish.
(BTCUSDT)
Although it is retesting the resistance band within the $56,000 to $60,000 zone, buyers have to prove more by closing decisively above the round number.
Bitcoin Miners In Trouble: Sell Pressure Continues
Even though bullish, at least from holders’ perspective, one analyst said there are troubling signs, especially from miners.
After April 20, when the network Halved miner rewards, miners operate in a different regime. Not only are miners receiving lower rewards, but they also have to upgrade, that is, commit more funds, to remain as efficient as possible.
In a post on X, the analyst said there is a brewing storm among Bitcoin miners.
He noted that the declining hash rate, a measure of computing power channeled to the network, is a leading indicator of this disturbance.
According to Blockchain.com, the hash rate has been falling since April, peaking at 647 EH/s in late May and falling to 552 EH/s in early July.
The analyst said a 2.5X decrease in miner income per block coincides with this trend. A 4X outflow, as seen in exchange sales volume, further worsens this state.
What this means is that miners are strained financially and are selling their haul to beat the pressure. This creates intense selling pressure, deflating any attempt for higher highs.
Miners face challenges when prices are increasing, meaning bulls’ efforts will likely be futile.
Zero BTC Demand From Speculators As Spot ETF Issuers Stack
The true “bottom,” the analyst said, is when the deluge of supply is far lower than demand.
Further, the behavior of short-term holders (STHs), mostly retailers/speculators who bought BTC within the last five months, raises concerns.
On-chain data points to a complete lack of demand.
(Source)
The absence of buying pressure may indicate market-wide pessimism or more selling.
Both might be attributed the Germany government unloading coins.
(Source)
Yesterday, they sold 2,738 BTC via exchanges and directly to market makers.
The good news is that as Germany dumped, spot Bitcoin ETF issuers were buys stacking.
(Source)
According to SosoValue, Grayscale, BlackRock, and Fidelity all saw impressive inflows, helping repair damaged sentiment and containing the sell-off.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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