Bitcoin’s Profitability Woes: Miners Face Harsh Realities as Prices Fluctuate

• Bitcoin miners face increased sell-off due to reduced profitability, exacerbating the ongoing market price decline.
• CryptoQuant CEO highlights persistent miner capitulation; daily mined value remains high compared to historical averages.

Amid the turbulence of the cryptocurrency markets, Bitcoin miners are grappling with increasing challenges that could have broader implications for the sector.

Recent developments have highlighted ongoing miner capitulation, a phenomenon that underscores current market pressures and may point to future trends in Bitcoin’s trading environment.

Miner capitulation occurs when declining Bitcoin prices reduce mining profitability, compelling miners to sell their holdings to sustain operations. This sell-off can exacerbate price declines, creating a cycle that impacts the broader market. 

#Bitcoin miner capitulation is still ongoing.

Historically, it ends when the daily average mined value is 40% of the yearly average; it's now at 72%.

Expect the crypto markets to be boring for the next 2-3 months. Stay long-term bullish but avoid excessive risk. pic.twitter.com/OCsiI57KPo

— Ki Young Ju (@ki_young_ju) July 9, 2024

CryptoQuant CEO Ki Young Ju notes that this phase is ongoing, with the daily average mined value significantly higher than historical cessation points. According to Ju:

“Bitcoin miner capitulation typically ends when the daily average mined value is 40% of the yearly average; currently, it stands at 72%.”

This situation suggests that the market could remain subdued in the coming months. Ju advises a conservative approach to trading during this period, recommending maintaining a long-term positive outlook while being wary of short-term risks.

Furthermore, the Bitcoin network’s total computational power, or hashrate, has seen a noticeable decline, falling to 540 exahashes per second from a peak of 751 EH/s recorded in April. This decline is indicative of miners shutting down their operations, a direct consequence of reduced profitability and heightened financial strain.

Transaction activity among major Bitcoin holders, or whales, also reflects the market’s current volatility. Data from IntoTheBlock shows a decrease in the number of transactions exceeding $100,000, which has dropped alongside fluctuating Bitcoin prices.

This reduction from over 17,000 transactions in late June to 15,330 transactions highlights a cautious sentiment prevailing among significant investors.

Despite these challenges, there remains a non-negligible chance of Bitcoin achieving new highs. ETHNews reports a 25% probability that Bitcoin could reach a new all-time high within the year, suggesting that underlying confidence in the asset’s value remains, despite current market difficulties.

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