{"id":10425,"date":"2022-10-24T09:55:07","date_gmt":"2022-10-24T13:55:07","guid":{"rendered":"http:\/\/cryptocornercafe.com\/cafe\/?p=10425"},"modified":"2022-10-24T09:55:07","modified_gmt":"2022-10-24T13:55:07","slug":"bitcoins-biggest-intra-market-risk-right-now-what-you-need-to-know","status":"publish","type":"post","link":"http:\/\/cryptocornercafe.com\/cafe\/2022\/10\/24\/bitcoins-biggest-intra-market-risk-right-now-what-you-need-to-know\/","title":{"rendered":"Bitcoin\u2019s Biggest Intra-Market Risk Right Now \u2013 What You Need To Know"},"content":{"rendered":"

The monetary policy of the Federal Reserve (FED) continues to be the all-determining factor for both the financial markets worldwide and Bitcoin. With this in mind, all eyes are currently on November 02, when the next Federal Open Market Committee (FOMC<\/a>) meeting is scheduled.<\/p>\n

However, while this is an external market risk, there is also an internal market risk currently developing that should not be underestimated from a historical perspective: a Bitcoin miner<\/a> capitulation event.<\/p>\n

The lower Bitcoin falls and the longer the price stays at the current level, the more pressure is put on Bitcoin miners\u2019 margins by a divergence of price and hash rate.<\/p>\n

Bitcoin\u2019s Mining Difficulty Reaches A New ATH<\/p>\n

A look at the Bitcoin mining difficulty adjustment that took place yesterday shows that it increased again by 3.44%. This follows the historical adjustment of October 10, when the mining difficulty increased by 13.55%.<\/p>\n

#Bitcoin<\/a> mining difficulty has just increased by +3.44%, making another new all time high as hash rate continues to soar.<\/p>\n

Miners are relentless. pic.twitter.com\/4GEyHxYoZ8<\/a><\/p>\n

\u2014 Dylan LeClair (@DylanLeClair_) October 24, 2022<\/a><\/p>\n\n

The difficulty is updated approximately every two weeks to account for the fluctuating hash power on the network and to ensure a minting of new Bitcoins approximately every 10 minutes (block time).<\/p>\n

Yesterday\u2019s adjustment is thus likely to put further pressure on already struggling miners who are seeing dwindling profits.\u00a0Will Clemente, co-founder of Reflexivity Research, asserted<\/a> that \u201cminers are the biggest intra-Bitcoin market risk right now IMO\u201d.<\/p>\n

A compelling theory for the steady rise in the hash rate, he says, is that a well-funded player is trying to squeeze out inefficient miners and acquire their assets on the cheap, \u201cRockefeller-style\u201d.<\/p>\n

As a result, miner capitulation could occur. During this event, the non-profitable miners would have to sell both their mining hardware and their holdings of Bitcoins. On a large scale, this could trigger a significant selling pressure on the Bitcoin price, as seen with past miner capitulations.<\/p>\n

Clemente stated that the likelihood of a second miner capitulation after the first period in June is rising. The leading indicator to watch are the hash ribbons.<\/p>\n

The likelihood of a second Bitcoin miner capitulation is rising. Source: Twitter<\/a><\/p>\n

Clemente concluded<\/a>:<\/p>\n

Thinking about who this entity(s) is that feels that it\u2019s advantageous to mine with BTC price down 70%, energy prices high, & hashprice at all-time lows.\u00a0Wonder if its a large player(s) with excess energy or access to dirt-cheap energy. [\u2026]\u00a0 That\u2019s why I\u2019m so curious because this would have to be someone with extremely low energy costs. Haven\u2019t seen any great answers thus far.<\/p>\n

Big Name Bitcoin Miners In Trouble?<\/p>\n

Dylan LeClair, senior analyst at UTXO Management and co-founder of 21stParadigm also noted<\/a> that the hash price<\/a>, or miner revenue per TeraHash, recently passed the 2020 all-time low. If history repeats from previous bear markets, the price decline has just begun, he said.<\/p>\n

In addition, he revealed that he has heard \u201csome juicy rumors flying around about some big name Bitcoin miners being in trouble here\u201d.<\/p>\n

The continued mounting pressure on Bitcoin miners can end in two scenarios, according to him. Either this is the bottom. \u201cThe lack of vol shows apathy from sellers. Extended consolidation\/accumulation period,\u201d LeClair stated.<\/p>\n

However, the scenario considered more likely by the analyst is that BTC has currently reached a level like $6,000 in 2018\/2019. If hash rate continues to soar, then the increasing pressure will result in a miner capitulation event.<\/p>\n

At press time, the BTC price continued to lack volatility and lingered at around $19,300.<\/p>\n

Bitcoin trading sideways. Source: TradingView<\/a><\/p>","protected":false},"excerpt":{"rendered":"

<\/p>\n

The monetary policy of the Federal Reserve (FED) continues to be the all-determining factor for both the financial markets worldwide and Bitcoin. With this in mind, all eyes are currently on November 02, when the next Federal Open Market Committee (FOMC<\/a>) meeting is scheduled.<\/p>\n

However, while this is an external market risk, there is also an internal market risk currently developing that should not be underestimated from a historical perspective: a Bitcoin miner<\/a> capitulation event.<\/p>\n

The lower Bitcoin falls and the longer the price stays at the current level, the more pressure is put on Bitcoin miners\u2019 margins by a divergence of price and hash rate.<\/p>\n

Bitcoin\u2019s Mining Difficulty Reaches A New ATH<\/p>\n

A look at the Bitcoin mining difficulty adjustment that took place yesterday shows that it increased again by 3.44%. This follows the historical adjustment of October 10, when the mining difficulty increased by 13.55%.<\/p>\n

#Bitcoin<\/a> mining difficulty has just increased by +3.44%, making another new all time high as hash rate continues to soar.<\/p>\n

Miners are relentless. pic.twitter.com\/4GEyHxYoZ8<\/a><\/p>\n

\u2014 Dylan LeClair (@DylanLeClair_) October 24, 2022<\/a><\/p>\n

The difficulty is updated approximately every two weeks to account for the fluctuating hash power on the network and to ensure a minting of new Bitcoins approximately every 10 minutes (block time).<\/p>\n

Yesterday\u2019s adjustment is thus likely to put further pressure on already struggling miners who are seeing dwindling profits.\u00a0Will Clemente, co-founder of Reflexivity Research, asserted<\/a> that \u201cminers are the biggest intra-Bitcoin market risk right now IMO\u201d.<\/p>\n

A compelling theory for the steady rise in the hash rate, he says, is that a well-funded player is trying to squeeze out inefficient miners and acquire their assets on the cheap, \u201cRockefeller-style\u201d.<\/p>\n

As a result, miner capitulation could occur. During this event, the non-profitable miners would have to sell both their mining hardware and their holdings of Bitcoins. On a large scale, this could trigger a significant selling pressure on the Bitcoin price, as seen with past miner capitulations.<\/p>\n

Clemente stated that the likelihood of a second miner capitulation after the first period in June is rising. The leading indicator to watch are the hash ribbons.<\/p>\n

The likelihood of a second Bitcoin miner capitulation is rising. Source: Twitter<\/a><\/p>\n

Clemente concluded<\/a>:<\/p>\n

Thinking about who this entity(s) is that feels that it\u2019s advantageous to mine with BTC price down 70%, energy prices high, & hashprice at all-time lows.\u00a0Wonder if its a large player(s) with excess energy or access to dirt-cheap energy. [\u2026]\u00a0 That\u2019s why I\u2019m so curious because this would have to be someone with extremely low energy costs. Haven\u2019t seen any great answers thus far.<\/p>\n

Big Name Bitcoin Miners In Trouble?<\/p>\n

Dylan LeClair, senior analyst at UTXO Management and co-founder of 21stParadigm also noted<\/a> that the hash price<\/a>, or miner revenue per TeraHash, recently passed the 2020 all-time low. If history repeats from previous bear markets, the price decline has just begun, he said.<\/p>\n

In addition, he revealed that he has heard \u201csome juicy rumors flying around about some big name Bitcoin miners being in trouble here\u201d.<\/p>\n

The continued mounting pressure on Bitcoin miners can end in two scenarios, according to him. Either this is the bottom. \u201cThe lack of vol shows apathy from sellers. Extended consolidation\/accumulation period,\u201d LeClair stated.<\/p>\n

However, the scenario considered more likely by the analyst is that BTC has currently reached a level like $6,000 in 2018\/2019. If hash rate continues to soar, then the increasing pressure will result in a miner capitulation event.<\/p>\n

At press time, the BTC price continued to lack volatility and lingered at around $19,300.<\/p>\n

Bitcoin trading sideways. Source: TradingView<\/a><\/p>\n

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