Several statistics are currently suggesting that the Bitcoin price is finally bottoming out after another capitulation event, possibly triggered by the Genesis/ DCG/ Grayscale story.
This final miners capitulation may be imminent as miners sell their BTC at the fastest rate since early 2016. In light of the new bear market, some Bitcoin miners are going through perhaps the toughest time ever.
BTC price fell to a new bear market low yesterday at $15,478, leaving it in no man’s land. At the time of writing, Bitcoin was trading just above its low at $15,678.
According to Charles Edwards, founder of the Capriole Fund, selling pressure among BTC miners has skyrocketed by 400% in the past three weeks. As a result, a “Bitcoin miner bloodbath” is currently playing out.
Miners are selling their Bitcoins more aggressively than they have in seven years. “If the price doesn’t go up soon, many bitcoin miners will give up,” the fund manager said. to add:
What we see now is not sustainable. Mine-and-hodl is not a viable strategy as a bitcoin miner. Miners are paying the consequences of the “never sell” arrogance that prevailed just 6 months ago. They have to constantly manage (trade) their bitcoin position in this market.
Glassnode data supports Edwards’ claims. They show that total miners’ balances fell this week to a 10-month low.
This is because miners are forced to sell some of their BTC to cover their operating costs at the current very low price. Their holdings are now worth about $30.4 billion, which is still almost 10% of Bitcoin’s supply.
Bitcoin miners currently face multiple challenges. The hash rate is near an all-time high, as is the mining difficulty.
Ultimately, many miners suffer from the sharply increased energy prices. All in all, plus the weak Bitcoin price, are the best breeding ground for a renewed miner capitulation. However, Edwards also sees a huge opportunity in this scenario.
“All previous Bitcoin cycles had bottomed out at this point in the halving cycle. We have less than 100 days before all other cycles went vertical. I am getting very excited,” Edwards wrote via Twitter.
This is historically the optimal time to allocate to Bitcoin. All previous Bitcoin cycles had bottomed out at this point in the halving cycle. We have less than 100 days before all other cycles went vertical. I get very excited. No investment advice. pic.twitter.com/O7BJr5qomz
— Charles Edwards (@caprioleio) November 22, 2022
Lead on-chain analyst at Glassnode, Checkmate, outlined that the profit/loss ratio of all BTC moved last week is hugely negative. “Less than $80 million in profit while posting $4.3 billion in losses. Capitulation.”
Meanwhile, Will Clemente, co-founder of Reflexivity Research, stressed that Bitcoin is doing well in the long run, quote four important metrics. Clemente said long-term holders continue to buy BTC.
Despite huge unrealized losses, the largest ever, the supply of long-term equities is at an all-time high. Eventually, blocks will continue to be added as active addresses reach new, higher lows.