Bitcoin (BTC) close to $ 20,000 is causing concern in the market, but after avoiding breaking support, is the worst really over?
According to many indications on the chain, it seems that the maximum pain has not yet occurred in this cycle.
There is a lot at stake for many hodlers this week – almost 50% of the supply is kept at a loss and miners are raising their shipments of BTC to the stock exchange.
Even some of Bitcoin’s largest investors, notably MicroStrategy, have to defend their beliefs about BTC when price action collapses.
With targets ranging up to $ 11,000, Cointelegraph examines how much further the market needs to technically fall to fit the historic bottom line.
Weak hodlers still need to be flushed out
Despite falling to an eighteen-month low, Bitcoin price action has not yet shaken out all its speculators. According to RHODL Ratio of Philip Swift, creator of the LookIntoBitcoin chain analytics resource, more aggression should be on the way.
This is because over time, the ratio between short-term and long-term hodlers has been more in favor of the latter on the macroeconomic bottom.
RHODL specifically takes the ratio between the 1-week and 1-2 year cohorts of the Realized Cap HODL Waves metric, which divides currencies according to when they last moved (weighted by real).
Essentially, when the green area of RHODL is, it indicates that capitation is at its peak and that the price floor is imminent or already being installed. To date, RHODL has not yet entered its green zone, according to data from the chain analysis company Glassnode.
There are not enough underwater hodlers
It may feel like the entire Bitcoin market is at a loss, but over $ 20,000, many are still holding on to what is likely to be a small profit and hoping for a return.
CryptoQuant’s on-chain analysis platform reveals that as of June 16, only 46% of the total BTC supply is held at a loss.
This is impressive as a statistic in itself but not enough to call a macro capitulation event if historical patterns are taken into account.
According to CryptoQuant data, at least 60% of the supply must form an unrealized loss before it can be called capitulation – as was the case in March 2020, late 2018 and earlier.
CryptoQuant CEO Ki Young Ju noted the importance of BTC / USD returning to real prices last week. This event, which is two years in the making, means that instant prices fall below the average price at which all currencies moved last.
“I have been waiting for this moment for 2 years since the big sale in March 2020,” he said at the time.
No surrender for miners despite “impressive” exchange rate fluctuations
Although their production cost is probably closer to $ 30,000 than $ 20,000, Bitcoin miners have not yet started to cover expenses by selling loaded BTC. Coins are moving alternately, albeit at a seven-month high, the Cointelegraph recently said.
Related: The $ 30K BTC price has a “serious impact” on Bitcoin mining profits
As such, the hash rate of the Bitcoin network has not taken a serious dip yet, something that is common during periods of significant price pressure.
The Hash Ribbons metric, created by Capriole CEO Charles Edwards, confirms the lack of development.
Hash ribbons use the 30-day and 60-day moving average of the hash exchange rate to determine when miners’ submissions occur. When a rising 30 days exceeds 60 days, it can be assumed that the “worst” is over when miners return to work.
So far this transfer is happening and historically this means that maximum pain could be ahead.
“Impressive bitcoin mining flow,” economist, trader and entrepreneur Max Krueger, meanwhile, comment on mining activities this week:
“Many miners would be in big trouble with $ BTC in their teens, to panic yesterday in the run-up to 20,000 offenses makes sense.
The views and opinions expressed herein are those of the authors only and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading business involves risk, you should conduct your own research when making a decision.
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