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The Bitcoin miner capitulation means major sell-offs from miners could trigger if Bitcoin falls another 20% from the current levels. Here’s what the possibility suggests.
The world’s largest cryptocurrency Bitcoin (BTC) continues to trade around $43,000 as of the weekend. One key area of focus for Bitcoin miners is the activity surrounding Bitcoin mining. Post China’s Bitcoin mining ban in May 2021, the BTC hashrate tanked by 50%. However, the BTC hashrate has fully recovered and is currently at a new all-time high following miners’ successful migration to the US Kazakhstan, and other parts of the world. Furthermore, the latest report from Glassnode shows that the Bitcoin miner community has resolved to heavy accumulation. Despite this correction, miners are accumulating Bitcoin at the fastest rate since May 2021.
— Bitcoin Archive 🗄🚀🌔 (@BTC_Archive) January 11, 2022
As the Bitcoin mining business continues to expand further, Bitcoin miners constitute a crucial role in deciding the BTC price action. There have been recent concerns that the current Bitcoin price dip can put pressure on miners to trigger a mass sell-off.
As per the historical trends, the worst Bitcoin dumps have occurred due to miner capitulation. So if the history were to repeat again we can see a major correction in the BTC price. But some analysts also believe that there are fewer chances of Bitcoin miner capitulation as of now.
Fewer Chances of Bitcoin Miner Capitulation
Charles Edwards, CEO of asset manager Capriole, recently points out the BTC production cost indicator. The venture founder also notes that the breakeven point for Bitcoin miners currently stands at $34,000.
Meaning, the current production cost for Bitcoin is $34,000. Edwards said:
“The worst dumps Bitcoin ever had were due to miners capitulation (December 2018, March 2020), when BTC fell below production costs, it is at risk for miner capitulation. BTC was at risk for miner capitulation at $30k in May. The current production cost is $34k, 20% below current price.”
Furthermore, as said we can clearly spot growing miner accumulation for Bitcoin. thus, the chances of a 20% correction from here onwards look lesser.
Bitcoin Holding the $42,000 Support
Bitcoin buyers have been trying hard over the weekend to reverse the downtrend. As of now, Bitcoin is already down 30% from its all-time high levels of $69,000.
Currently, Bitcoin is holding above $42,000 and the next immediate support will be $40,000. Besides, the upside could be limited as well as $45K-$47K seems to be a strong resistance zone. The RSI has also been rising from the oversold zone.