bitcoin is unraveling at the time of writing, cooling off from May highs of nearly $72,000. With a drop of about 10% from the all-time highs, there could be more losses on the way, at least if you look at the candle arrangement on the daily chart.
Now, Willy Woo, a bitcoin on-chain analyst, x.com/woonomic/status/1800305774952149055″ target=”_blank” rel=”nofollow”>think The drop is mainly due to the current “mining capitulation.” Woo notes that the network is now actively “weeding out” weak miners, forcing them to shut down their operations.
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On the way out, they sell their btc holdings, fetching thousands, if not tens of thousands, of the currency.
Due to market dynamics, the greater the supply, the lower the prices; bitcoin is falling, squeezing miners even more. It remains to be seen how long this will continue, but the impact of Halving is now increasingly evident.
In Woo's opinion, the capitulation of the miners is necessary. Furthermore, forced liquidation of btc by weak miners will only make the network more resilient. This is because “culling” will remove less efficient players from the network, ultimately leading to a more robust system.
On April 20, the bitcoin network halved miner rewards from 6.25 btc to 3.125 btc. Since miners rely on rewards as their main source of income, their income dropped by 50%.
If they decide to continue operating, they must not only compete with larger mining companies, most of which are public, such as Riot Blockchain and Mara Digital, but they must also be very efficient and use modern equipment for a higher hash rate.
Staying efficient is a major challenge, and rather than compete with public miners, some are apparently folding and choosing to leave the business.
Interestingly, even when “weak” miners close their operations, the network's hash rate (a measure of total computing power) is still near record levels. According Y ChartsThe hash rate is 578 EH/s, compared to 721 EH/s recorded on April 23.
Will btc prices recover if speculative bets are eliminated?
Woo also believes it is necessary to “purge degen's open interest in futures betting.” The analyst says excessive leverage trading on perpetual platforms like Binance, OKX, and Bybit must decrease. The rise in degen trading has fueled “paper bitcoin” or speculative betting.
Woo explains that after the collapse of FTX in November 2022, speculative bets where deletedallowing for a rapid recovery of btc prices in the following months.
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If the coin recovers and rejects the current attempts at lower lows, the authorization of The current surplus of “paper bitcoin” will be needed for sustained progress.
For now, it remains to be seen whether “cleaning up” weak miners and speculative betting will help drive prices up. bitcoin is slowly falling, confirming June 6 losses.
x/TNo41JoX/”>x/TNo41JoX/” alt=”bitcoin price is trending downward on the daily chart | Source: BTCUSDT on Binance, TradingView” width=”1233″ height=”592″/>bitcoin price is trending downward on the daily chart | Fountain: x/TNo41JoX/” target=”_blank”>BTCUSDT on Binance, TradingView
Immediate support is at $66,000. If this level is missed, btc could quickly fall to $60,000 or even the May 2024 lows of $56,500.
