- Bitcoin capitulation was relatively low in the last five years.
- Rising difficulty and hash rates could add selling pressure on miners.
Over the last week, the price of Bitcoin[BTC] dropped below the $30,000 mark, causing uncertainty in the market. Many speculators believe that if BTC’s price falls further, it could impact various sectors of the crypto industry, especially miners.
Read Bitcoin’s Price Prediction 2023-2024
Bitcoin mining – A profitable enterprise?
However, recent data indicated that miner capitulation over the last 5 years has been relatively low. Miner capitulation refers to the act of Bitcoin miners stopping or reducing their mining activities due to unfavorable market conditions, typically caused by declining Bitcoin prices or increased mining difficulty.
A shorter miner capitulation suggests that compared to previous years, miners have been relatively resilient and have continued to operate their mining operations despite potential challenges in the Bitcoin mining ecosystem.
Source: glassnode
However, things could get worse for miners in the future, and selling pressure could rise. One of the reasons for the growing selling pressure on Bitcoin would be the rising difficulty for miners. The surge in mining difficulty increases the effort required to mine new bitcoins.
Miners may face higher operational costs and reduced mining rewards. To cover expenses, some miners might be compelled to sell more of their mined bitcoins. This higher selling activity can lead to increased selling pressure on the market.
The cumulative effect of multiple miners selling can contribute to a downward price movement for Bitcoin.
Source: Blockchain.com
Additionally, the rising hashrate could also contribute to a rise in selling pressure for miners.
As the hashrate surges, competition among miners intensifies. To stay competitive, miners invest in more powerful equipment, which creates financial pressure. To cover these costs, miners may need to sell more of their mined coins. This increased selling activity can lead to higher selling pressure on the market.
Source: Blockchain.com
Due to these factors, the revenue generated by miners fell materially. It is yet to be determined whether these miners will capitulate or continue to show faith in BTC.
Source: Blockchain.com
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Even though miners’ hope in Bitcoin is uncertain, retail investors have continued to show optimism. According to recent data provided by Glassnode, the number of addresses holding more than 0.011 BTC has reached an all-time high.
Source: glassnode
