Bitcoin’s Price May Fall Below $20K Due to Capitulation of Miners
Many miners were forced to sell their assets after the sharp drops in the price of bitcoin in order to limit any losses.
The company’s Miners Reserve chart depicts the typical actions of BTC miners, and as the graph below illustrates, they just traded a sizable amount of their holdings. This appeared after having accumulated for more than a year after the previous sell-off at the beginning of 2021.
There is, however, a significant distinction between the two sell-offs. Miners were probably cashing out when bitcoin surged to a new record high of almost $30,000 in January 2021. However, the situation has changed as a result of the asset’s about 70% decline since its most recent peak in November 2021.
In order to “minimize the potential losses and lower their overall risk,” miners were “forced” to sell their BTC at current market prices as a result of the most recent drop, which was made worse in June, which ended up being the asset’s worst trading month in 10 years.
The analytics tool concluded that miners were in a distribution phase and that this increased selling pressure was a result of the capitulation event. It cautioned that this pressure “could push the price even lower in the short-term and bitcoin could drop well below the $20K mark in the near future.”
BTC has fallen below $20,000 as a result of the recent market correction, which was likely sparked by the Terra collapse in May, the 3AC, Celsius, and BlockFi scandals in June, as well as the general economic unrest.
As previously indicated, miners, who form the foundation of the biggest cryptocurrency in the world, had to sell some of their holdings. In fact, according to one source, they disposed of all of their outputs in May, and a number of other miners allegedly did the same in June.
That was insufficient for businesses like Compass Mining, which had to fire 15% of its workforce only a few weeks after two of its C-level executives left the company.
Weather conditions in various US states took additional toll on the mining environment. After a severe storm, Marathon Digital’s mining operations in Montana suffered, and several miners based in Texas were forced to halt working because of the rising temperatures.
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