Bitcoin (BTC) Miners Crisis: Sell or Buy?

After last week’s Fed decision, Bitcoin [BTC] seems to be facing another troubling factor influencing its price—miners.

Bitcoin [BTC] price movements have been influenced by several factors this year, including the Federal Reserve’s decision and now, another key player in the BTC ecosystem — miners.

After the Fed failed to cut interest rates in June, the largest digital asset dropped below $70K, countering market expectations.

Now, as of press time, BTC had trouble staying above $65K due to what market analysts claimed could be headwinds from BTC miners.

According to James Van Straten, a well-known on-chain analyst, BTC miners sold over 30,000 BTC of their reserves since last October.

“Miner addresses collectively hold a substantial treasury of 700,000 BTC, but their balance has decreased by 30,000 BTC since October. This period marks the longest distribution phase for miners since 2017, adding to headwinds.”

To put it another way, miners, particularly those who became less efficient following the April halving event, are selling their holdings to cover costs and possibly exit the sector due to profitability issues.

The miner profitability crisis, also known as miner capitulation, has been ongoing for the past 33 days. Hence, the selling pressure from miners could be one of the factors weighing on the BTC price at the moment.

Some miners have ventured into AI computing in an effort to remain profitable after the April halving event.

However, Quinn Thompson, CIO of crypto hedge fund Lekker Capital, saw the ongoing miner crisis as a ‘top indicator for crypto’ and worse than the miner crisis in the 2022 crypto winter.

“What is a better top indicator for crypto than all BTC miners getting indiscriminately bid up on the coattails of AI and $NVDA?”

Another user and analyst, Willy Woo, stated that the BTC price would be “punished” until the hashrate improves.

“Bitcoin price will continue to be punished until the hash market picks up some volume. This is why bankers used to call it drug money.”

According to Blockchain data, hashrate, the computing power to mine a BTC, declined significantly after halving in April and later in May.

Like Woo, another analyst, Cole Garner, stated that a BTC buy signal was imminent if the hashrate recovered.

“When hashrate reverts, Hash Ribbons will print one of the most historically reliable #bitcoin buy signals ever seen. And we’re close to that signal.”

Hash Ribbons are moving averages that track hashrate downtrends and usually signal buy signals.

That said, while Thompson saw the miner crisis as a “market top indicator,” others timed it as a potential buy signal.

Moreover, BTC’s value has typically stayed near its average mining cost, which hit $86K, and could push the king coin to hit the target soon enough.

News source：https://www.kdj.com/cryptocurrencies-news/articles/bitcoin-btc-miners-crisis-sell-buy.html

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