Why are Bitcoin Miners Capitulating? Blockchain News, Opinion, TV and Jobs

Marcus Sotiliu, an analyst for UK-based digital asset brokers GlobalBlock

Bitcoin was severely rejected by the $ 31,500 level of the key and was unable to maintain a rally above $ 30,000 yesterday as well. This level is important to overcome as Bitcoin rises towards $ 35,000.

Some on-chain metrics suggest that the bottom may not yet be visible and there may be more sales pressure.This is shown by the data from GlassnodeSpecifically, it is net unrealized profit / loss (NUPL). This is a measure of unrealized gains and losses across the network as a percentage of market capitalization. This indicator shows that less than 25% of market capitalization is held in profit. This has happened three times since 2015, each with a surrender phase, which is even more negative in the months that follow.

In addition, changes in Bitcoin miner’s net position indicate that Bitcoin miner has been a net seller for the past month as the miner distribution (sales pressure) peaked at around 8,000 bitcoins a month. .. I think this selling pressure from miners may be due to the decline in Bitcoin prices, which has reduced the miners’ profitability. However, Intel has released a second-generation Bitcoin-specific mining chip that is more efficient than most rivals, so we’re not worried about this behavior. Cryptographic miner Hive Blockchain has sold about 10,000 ETH to pay for Intel Bitcoin mining rigs. These will be mass-produced in early 2023 and have the potential to increase the profitability of Bitcoin miners. I think this will help mining companies achieve their ESG (Environment, Society, Governance) goals and thus encourage global adoption of Bitcoin mining.

A key factor in determining if there are any more downsides in the coming months is whether inflation will continue to rise. US CPI data May will be released on Friday and is expected to be 8.2% year-on-year. This is down 0.1% from the consumer price index of 8.3% in April. Expected readings are similar to lower inflation, but I think the Fed needs to see a much lower decline in order to change course.