The price of Bitcoin (BTC) plunged to a 52-week low of $20,800 early on Wednesday, down more than 70% from its all-time high of nearly $69,000. Although the price has since recovered above $21,000, key market indicators point to the bears having significant control over the current market.
Deposits from Bitcoin miners to exchanges, a metric indicating the volume of BTC sent by miners to cryptocurrency exchanges, rose to a seven-month high of 9,476. The increase in deposits to exchanges indicates that miners are selling their coins in anticipation of the price falling further.
The actions of BTC miners often reflect the broader market sentiment, as they mostly sell BTC to ensure they don’t incur a loss on their mining rewards. The increased selling activity of Bitcoin miners is supported by the significant decline in the profitability of mining the cryptocurrency.
The profitability of mining has fallen more than 75% from the maximum, and the Bitcoin hash price currently stands at $0.0950 TH/day, which is the lowest point since October 2020.
Deposits from miners to exchanges have also reached positive levels. When said metric is positive, it means that more coins are being sent to exchanges than to personal wallets. This behavior would indicate that miners are bearish on price and under pressure to sell.
Many BTC mining rigs have become unprofitable as the price dropped below $21,000 and are at risk of being pulled offline if the price does not recover. The rest of the cryptocurrency market followed BTC in its price action as the overall market capitalization fell below $1 trillion.
Over the course of the last decade, BTC has seen numerous bull cycles followed by an 80%-90% decline from the all-time high. However, the price of BTC has never fallen below the all-time high of the previous cycle. BTC is currently trading very close to its 2017 high of $19,783, and any potential sell-off from here could take it into 2017 territory.
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