On-chain data suggests that bitcoin miners may be nearing surrender after selling off the bulk of their BTC holdings over the past several months. As such, Cryptoquant warned, the price of the asset could move “well below” $20,000 for another short-term decline.
Capitulating Bitcoin Miners?
The company’s miners reserve chart shows the general behavior of BTC miners, and, as the graph below shows, they sold a significant portion of their holdings over the past few weeks. This comes after accumulating over a year after the previous such sell-off in early 2021.
However, there is an important difference between the two sell-offs. In early January 2021, miners were making the most of profits as bitcoin hit a new high of around $30,000. Now, however, the scenario is different as the asset has declined by almost 70% since its latest peak in November 2021.
The latest correction, according to CryptoQuant, accelerated in June, which proved to be the asset’s worst trading month in a decade, “forcing” miners to sell their BTC at the current market price to “minimize potential losses and reduce their overall losses.” Forced to minimize risk.”
Concluding that the miners are now in a distribution phase, the analytics resource warned that this increasing selling pressure due to the capitulation event “could push the price even further down in the near term and bitcoin below the $20K mark in the near future.” might fall. .”
Miners suffering, declining hash rate
The collapse of Terra in May, the 3AC, Celsius, BlockFi fiasco in June and the broader retracement in the market due to the overall economic turmoil made BTC tough in the south over the past few months, dropping below $20,000.
As mentioned above, miners, the backbone of the world’s largest cryptocurrency, had to sell some of their stake. In fact, one report claimed that they settled all their output in May, while several other miners did the same in June.
Still, that wasn’t enough for companies like Compass Mining, which had to fork out 15% of its headcount just weeks after two of its C-level execs left the firm.
The mining landscape was dealt another blow by weather conditions in various US states. Marathon Digital’s mining operations in Montana were damaged after a heavy storm, while several miners based in Texas were forced to cease operations due to rising temperatures.
Overall, the hash rate has dropped by 25% since its peak charting a couple of weeks ago and is now down to 190 Ehash/s.
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