Bitcoin and other cryptocurrencies are feeling the effects of the negative trends occurring in the market. The crypto winter that some experts believe will end in early November is still in full swing. Crypto critics like Warren Buffet still view crypto as a risky asset.
The FTX saga has further changed the narrative, with investors unsure about holding their positions with exchanges. In addition, the Securities and Exchange Commission (SEC) now has support in the lawsuit against XRP.
In the aftermath of these chaotic events of the past few weeks, the market outlook showed a high fear index. As a result, bitcoin mining is taking a beating as events continue to unravel on a daily basis.
Hash ribbon forms a cross of death – what does it mean?
The hash ribbons – a technical indicator – have formed a so-called “death cross” that has previously indicated that bitcoin miners succumbed to pressure. These indicators use simple daily moving averages to unravel any changes in hash rates.
Hash ribbons are known for their long-term uses to identify macro bottoms on a Bitcoin chart. The formation of a bearish cross signals a strong downtrend. It means that the hash rates will decrease from the previous optimal levels.
According to Charles Edwards op Twitter, the miner’s capitulation is a result of the $10 billion FTX fraud and collapse. Will Clemente, an industry analyst, observed the signal that “we may be entering a double-dip capitulation period for miners.”
A similar event occurred in June 2022 with the formation of a death cross following the collapse of Luna. Glasnode reports that the hash rate seven-day moving average is 13.7% lower than its all-time high.
Mining difficulty will now fluctuate by -9% over the next week. Hash rates have dropped dramatically as more miners begin to shut down their mining rigs. Today’s hash rate is 234 EH/s (exahashes per second.
The mining difficulty is at its peak of 36.9 T. This figure will decrease as the hashrate drops and the competition between miners decreases. However, mining profitability (hash price) has been the hardest hit at $0.056 per day for every TH/s.
Profitability is on the decline, with a drop of 82.55 within a year. In addition, miner capitulations tend to the bears and add more selling pressure, leading to a fall in the BTC price in the near term.
Bitcoin price update
Bitcoin price is showing signs of a slight uptick today. Despite a short retracement on Sunday, the price has consolidated in the $16,000 to $17,000 range.
The FTX effect in the market is the main cause of the latest downtrend. At 76.5%, BTC is a long way from its all-time high in November 2021 and is trading at a two-year low.
The current crypto market closely mirrors the bear market of late 2018 after the capitulation in November of that year. With such an unexpected turn, a bullish rally may not hold for a while.
With the bearish cross in the hash ribbons, pessimism is on the rise for crypto prices. With lower miner rewards, it is highly likely that more miners will close shop in the coming weeks.
Featured image from Pixabay, chart from TradingView.com