Cryptocurrencies

Bitcoin (BTC) has been in a downtrend for over two weeks and is now trading

Bitcoin (BTC) has been in a downtrend for over two weeks and is now trading 13.8% below its all-time high of $73,835, reached on March 14. Analysts believe that Bitcoin must regain its hash rate and get rid of “weak hands” to end the crisis. Downward trend.

Independent analyst Willy Wu noted that the Bitcoin price would only recover when “weak miners die” and the hash rate recovers.

“This is for the record books because it takes a long time for miners to give up after the halving,” Woo wrote in a June 21 post on social media platform X.

Miner capitulation is a theory that assumes that miners will turn off their machines and sell their coins if the price of Bitcoin falls below a certain price and mining becomes unprofitable.

When Bitcoin “escapes the hands of the weak,” it means that inefficient miners using outdated hardware and high costs will go bankrupt. The analyst explained that others are forced to upgrade to more efficient devices as their revenues have dropped by half. “Both cases force miners to sell their bitcoins to pay for losses or hardware upgrades. “

“Once this is done, the sale ends, and only the strongest remain, waiting for prices to increase.”

Wu added that surrender is taking longer in the current cycle, perhaps due to increased profits. “Thanks to the ordinal inscriptions.”

He shared the following chart which shows that hashrate recovery is taking longer compared to previous cycles.

Bitcoin hash recovery. source: said

In comparison, it took 24 days for the hash rate to recover during the 2017 cycle and only 8 days in 2020.

“And today. We’re still waiting for the miners to die properly. 61 days so far.

Bitcoin hash rate refers to the number of attempts made per second to solve the mathematical puzzle that validates Bitcoin transactions.

When Bitcoin’s hash rate increases, more computing power is used, increasing energy costs and lengthening verification and transaction times.

“The average cost of mining Bitcoin is currently $86,668,” fellow analyst Ali Martinez announced in a June 15 article on X.

“Historically, the price of BTC always exceeds the average cost of mining! »

Average Bitcoin mining costs. source: Ali Martinez

Fellow analyst Mr Anderson also sees when the price of Bitcoin is likely to end a downtrend, which he says would require a “jump”, which occurs “when the price falls sharply , which encourages less committed traders to sell.

“The goal is to create panic and increase sales,” he explained in a message dated June 18.

“After weaker traders exit, the price often stabilizes or rebounds as stronger traders buy at lower prices.”

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research before making a decision.

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