After Bitcoin’s rally to the $69,000 range, there has been a notable recovery in the Bitcoin network hashrate. This recovery, as reported by CryptoQuant, has led to a decrease in the drawdown from its all-time high to just 3%, compared to 8% in July. The increased hashrate has also been accompanied by rising profitability for miners, making it more lucrative for them to continue mining Bitcoin.
The uptick in miner profitability has important implications for the selling pressure on Bitcoin. With miners now being paid more than they have been since the Bitcoin halving in April, they are less likely to sell their holdings to cover operational costs. This could potentially result in less BTC being introduced to the market, which may impact the overall supply and demand dynamics of the cryptocurrency.
Bitcoin’s latest rally has caused a significant increase in daily miner revenues, with a roughly 50% rise from the year-to-date low. This increase in revenues has also contributed to the recovery of Bitcoin’s hashrate. Interestingly, despite the rise in profitability, daily miner outflows have remained relatively low compared to earlier this year. This could be attributed to miners holding onto their BTC in anticipation of further price appreciation.
It is important to note that there is a divergence in behavior between larger and smaller Bitcoin mining entities. Larger miners have been increasing their BTC holdings, while smaller firms have been selling off their assets. This trend has led to a significant difference in the total balance of BTC held by these two groups. The disparity in behavior could have broader implications for the market, especially if smaller miners continue to offload their holdings at a faster rate.
Despite the recent increase in profitability and revenues for miners, there is a looming risk of remaining at “depressed levels” with regard to fees. This dependence on Bitcoin’s price for profitability could pose challenges for miners if the price of Bitcoin were to experience significant volatility. It is crucial for miners to consider strategies to mitigate this risk and ensure their long-term sustainability in the market.
Bitcoin’s latest rally has had a significant impact on miner profitability and selling pressure. The recovery of the hashrate, alongside increased profitability, has reshaped the behavior of miners in the market. Understanding these dynamics is crucial for investors and market participants to navigate the ever-changing landscape of the cryptocurrency market.
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