The market is really testing investors’ patience at the moment.
Bitcoin [BTC] is still trading about 30% below its peak of $126k, leaving many holders underwater. For example the STH cost basis amounts to approximately $102,000. So short-term investors see roughly 12% in unrealized losses.
The mining sector is also not doing much better.
According to Glassnode, total miner turnover fell from 562 BTC in mid-October to 502 BTC now – a drop of 11%. That’s a clear sign that miners are feeling the pressure as revenue and profitability take a hit.
Source: Glassnode
Notably, this decline is happening as mining difficulty reaches new highs.
Bitcoin in early November mining problems has risen to a record 159 trillion, meaning miners now need more hashing power and electricity to earn the same rewards. In short, they work harder, but earn less.
That puts serious pressure on profitability.
Add to that the fact that the market has not yet fully enabled risk, with BTC’s $90,000 bottom still shaky, and it begs the question: Are miners being pushed towards capitulation as revenues decline and difficulty reaches record highs?
Bitcoin miners are under pressure due to market uncertainty
It seems like it’s still too early to call a bottom.
Institutional capital in Bitcoin has not yet fully arrived. BTC ETFs showed good results volatile flowswith money flowing in and out every day. For example, the most recent data indicated a net outflow of $80 million.
Historically, BTC’s big moves during previous bull rallies have depended on consistent ETF inflows. Without that support, a drop below $90,000 remains a real possibility. And it seems that the miners’ patience is already running out.
Source: Glassnode
At the end of November, Bitcoin miners’ net position change remained in the red, at -3,555 BTC. This corresponded to a drop in BTC to around $80,000. Interestingly, a similar pattern seems to be occurring again.
The accompanying chart shows that the metric has turned red again, with -487 BTC in net outflows – a sign that some miners may be starting to capitulate. This can put pressure on the 30-day period BTC supply kept in miner wallets.
Essentially, a new wave of miner distribution could be emerging beneath the surface. With market volatility still high and bullish BTC bids remaining cautious, a complete capitulation of Bitcoin miners cannot be ruled out.
Final thoughts
- Bitcoin miner revenue has fallen 11% in two months, signaling stress in profitability as mining woes reach record highs.
- The changes in miners’ net position indicated that some are beginning to capitulate.