Introduction to the Current State of Bitcoin
The market is actually testing investor patience right away. Bitcoin continues to be trading about 30% below its $126k peak, leaving a whole lot of holders underwater. For example, the Short-Term Holder (STH) cost basis is around $102k. So, short-term holders are seeing roughly 12% in unrealized losses.
The Mining Side of Bitcoin
The mining side isn’t doing a lot better either. According to Glassnode, total miner revenue dropped from 562 BTC in mid-October to 502 BTC now – an 11% decline. That’s a transparent sign miners are feeling the squeeze as revenue and profitability take successful.
Mining Revenue and Difficulty
Notably, this drop is occurring whilst mining difficulty hits recent highs. In early November, Bitcoin mining difficulty jumped to a record 159 trillion, meaning miners now need more hashing power and electricity simply to earn the identical rewards. Basically, they’re working harder but making less.
Source: Glassnode
Pressure on Miners
That’s putting some serious pressure on profitability. Add within the proven fact that the market hasn’t fully turned risk-on yet, with BTC’s $90k floor still shaky, it begs the query – Are miners being pushed towards capitulation as revenue drops and difficulty hits record highs?
Institutional Capital and Bitcoin
Institutional capital in Bitcoin hasn’t fully arrived yet. BTC ETFs have been showing highly volatile flows, with money moving out and in day-to-day. The most up-to-date data, for instance, highlighted $80 million in net outflows. Historically, during previous bull rallies, BTC’s big moves have relied on consistent ETF inflows. Without that support, a drop below $90k stays an actual possibility. And, it looks like miner patience is already wearing thin right away.
Miner Net Position Change
Back in late November, Bitcoin miners’ net position change stayed within the red, hitting –3,555 BTC. This corresponded with BTC dropping to around $80k. Interestingly, the same pattern appears to be emerging again.
Source: Glassnode
Conclusion
In essence, one other wave of miner distribution might be brewing under the surface. With market volatility still high and bullish BTC bids remaining cautious, a full-blown Bitcoin miner capitulation can’t be ruled out. The key points to think about are:
- Bitcoin miner revenue has dropped 11% in two months, signaling stress in profitability as mining difficulty hits record highs.
- Miners’ net position changes indicated that some are beginning to capitulate.
