Bitcoin (BTC) has been under significant pressure, breaching key support levels and trading below $65,000. The decline happens at the time when the US stock market has recently recovered and Bitcoin was corrected by 10% from the peak of $72,000 in June.
For the past week, Bitcoin has been performing rather poorly against the stock market, dropping to its lowest point in the last 4 weeks. This decline has happened with no new major events that could affect investors’ decisions, which may signal a change in market psychology.
According to IntoTheBlock, the crypto market had almost doubled its value from Q4 2023 to Q1 2024, and there are signs of profit-taking. This has put a lot of pressure on the BTC prices as investors seek to book their profits after a good run.
Impact of Miner Activities on BTC Prices
Over 30,000 BTC or nearly $2 billion have been liquidated by miners in the crypto community this month alone. The recent Bitcoin halving event has led to increased operational costs and decreased profits for miners, causing them to liquidate their assets to meet operating costs.
This has contributed to the bearish trend in the market as more miners sell off, thus intensifying the price drop.
I’ll break it down in simple terms.
When does #Bitcoin recover? It’s when weak miners die and hash rate recovers.
This one is for the record books as it’s taking a lot of time for miner capitulation post-halving.
Probably can thank ordinal inscriptions boosting profits. pic.twitter.com/19MB0b8mHO
— Willy Woo (@woonomic) June 20, 2024
Miner capitulation, a situation where miners begin shutting down their mining hardware and selling the BTC they have mined due to the fact that it becomes uneconomical to mine, is also apparent. This is because miners require better hardware and this in turn affects the market in one way or the other.
ETF Outflows and Market Sentiment
The U.S. Spot Bitcoin ETFs have recorded substantial outflows, amounting to $545 million this week alone. This trend is noteworthy, especially considering that these outflows occurred over just four trading days due to the market closure on June 19 for the Juneteenth holiday.
Outflows from Fidelity’s FBTC led these with a withdrawal of $44..8 million, followed by Grayscale’s GBTC and ARK 21Shares Bitcoin ETF (ARKB) that attracted $34. 2 million and $28. 8 million, respectively.
These outflows show that investors have become more hesitant and are bearish on the short-term value of the Bitcoin. These outflows are in sync with the Bitcoin price which continued to be in the negative territory although it had a brief rally in the last 24 hours. This could lead to further declines since market sentiment will remain weak.
Bitcoin’s Hashrate and Recovery
The Bitcoin network’s hashrate, which refers to the total computational power applied to mining and validating transactions, has been volatile since the halving. A healthy hashrate is essential for the security of the network and demands much power, and this eventually leads to high costs as the price of Bitcoin drops.
#Bitcoin‘s average mining cost is currently at $86,668.
And guess what? Historically, $BTC always surges above its average mining cost! pic.twitter.com/S3UkwgvS3N
— Ali (@ali_charts) June 15, 2024
Experts claim that the hashrate needs to be restored, and capitulation events among miners need to stop in order for the price of Bitcoin to rise again.
At the moment, the average mining cost of Bitcoin stands at $86,668; this is a far cry from the current market price. It has been noticed in the past that Bitcoin tends to bounce back above the average cost of mining, which implies a possibility of a bounce back if the market conditions improve and the hashrate comes back to support a healthy and strong state of the network.
