Bitcoin Miners Feeling the Heat, More Selling Pressure Imminent?
Bitcoin remains stuck in a tight range as market sentiment dips from bullish to bearish and market participants brace for a possible impact. The cryptocurrency thrives on the possibility of a positive change in the macroeconomic landscape. Bulls jumped into a trap?
At the time of writing, Bitcoin (BTC) is trading at $16,800 with sideways movement in the last 24 hours. Last week, the cryptocurrency held on to some gains, but there is a chance that the bullish trajectory will return to annual lows.
Bitcoin miners will contribute to the price drop?
On the macro stage, the US Federal Reserve (Fed) is the biggest obstacle to future Bitcoin profits. The financial institution tries to bring down inflation by raising interest rates. This monetary policy has hurt the risk on assets.
Fed Chair Jerome Powell hinted at moderating monetary policy, but this possibility may become less likely. Recent robust US economic data could provide support for further rate hikes.
The market is pricing in a further 75 basis point (bps) increase for December. In addition to Fed tightening, the war between Russia and Ukraine is adding to market uncertainty. The conflict is taking a step back in mainstream media headlines, but hostilities are escalating.
#RussiaPutin says the threat of nuclear war is on the rise. Putin says Russia considers nuclear weapons a response to an attack. Says that Russia’s nuclear weapons are a deterrent in conflicts. pic.twitter.com/5RMIC7UK6A
— Holger Zschaepitz (@Schuldensuehner) 7 December 2022
On the local scene, data from CryptoQuant shared with NewsBTC from the latest Bitfinex report indicates that BTC miners are “moving a large amount of Bitcoin out of their wallets.” These transactions are often bearish indicators for the cryptocurrency.
Miners withdraw BTC to sell in the market and cover their operating costs. This selling adds to BTC’s bearish pressure. Bitfinex noted the following while sharing the chart below:
On the other hand, when the value of the indicator decreases, this indicates that miners are withdrawing coins from the wallet. Such a trend could be bearish for Bitcoin since the miners can transfer their coins out of their wallets to sell them on exchanges. BTC exchange supply has also increased slightly in the past week after dropping significantly in the few weeks prior to that.
Other factors to consider
In addition to miners struggling, the market is seeing BTC holders sell their coins at a loss. The Spent-Out Profit Ratio (SOPR) indicator is above one, which means investors are capitulating and cashing out due to the current macro conditions.
Bitfinex highlighted increased retail investors holding BTC as a positive takeaway from this data. These investors increase the balance while the price goes down. These classes of investors, the report claims, are “resilient in the face of price declines” and could eventually bottom out the BTC price.
