The macroeconomic environment has been less than ideal for many financial markets this year. Even the bitcoins (BTC) is down more than 60% since the beginning of the year. Despite this, trading volume has been reasonable since July of this year consist remained. Furthermore, it appears that a large number of investors continue to hold onto their bitcoin despite the bear market. What exactly does all of this mean?
Will bitcoiners hold up?
Out data from analytics firm Glassnode shows that the number of long-term holders of bitcoin is increasing and therefore they generally do not sell their coins. Obviously, this is one of the reasons why the price of Bitcoin has been relatively stable over the past few months.
From further away data by Glassnode, 60% of the outstanding bitcoin supply has been dormant for more than a year. While this is a positive sign and could lead to price stability, it is not a guarantee. In 2018, a period of similar stability was followed by a bloody month. At the end of 2018, the price of bitcoin fell by no less than 50% from November to December.
Bitcoin miners in serious trouble
However, there is a lot of selling pressure right now, especially on bitcoin miners. The hash rate is historically high, but the price is low. Also, energy prices and equipment costs are rising, leading to high debts. In July alone, bitcoin miners collectively harvested 4 billion dollars to debts. This is why many bitcoin miners have been forced to sell their mined BTC and their BTC reserves lately.
So the miners are in big trouble. asks a prominent miner failure and mining company stock prices are close evaporated. The next few months will be crucial for many miners. A speedy recovery would come at the right time for these companies that can barely keep their heads above water. However, they are heavily dependent on the actions of the US Federal Reserve, which continues to raise interest rates in its fight against inflation.
The world is struggling with decades of high inflation, there’s an energy crisis in Europe, there are problems with the global supply chain, and bitcoin miners can barely keep their heads above water. Despite all of this, long-term bitcoin holders still seem confident and reluctant to sell. We will see in the coming months if a scenario like the one at the end of 2018 will repeat itself or if the owners will lose their diamond hands will keep closed.
