Bitcoin price drops, miners about to flee?
As the price of Bitcoin continues to drop, there are rumors that many Bitcoin miners will have to start shutting down their rigs.
The world's most expensive cryptocurrency has been getting cheaper lately, falling below $9,000 on Nov. 8, with some analysts predicting it could dip below $7,000 before mining revenues are halved in May 2020. At 17:27 UTC on November 19, 2019, the Bitcoin price was at $8,152, down 3.7% in the past 24 hours and 7% in the past week, paring its monthly gain to 1.7%. But over the past 12 months, prices have risen 59%.
Earlier this year, Adamant Capital (Bitcoin hedge fund) warned: "Because of their huge turnover and huge ability to hold or sell Bitcoin, Bitcoin miners have a huge influence on the industry's boom and bust cycles."
That being said, cryptocurrency analyst Charles Edwards believes that 60% of miners may “surrender,” saying: “This level of hash rate growth is unprecedented in the history of Bitcoin.” The analysis further explained, “The hash rate 1-month and 2-month moving averages, except during the ‘miner flee’ event, have never been this close for so long.”
Edwards explained that miners appear to be wary as they may be deciding whether to continue mining in order to accumulate more wealth, or risk missing out on Bitcoin’s bull run by cutting back on their hashing power.
Popular analyst Willy Woo has concluded using an indicator he developed, the "Bitcoin Difficulty Ribbon," that we're witnessing a unique bear market setup that culminates in a drop in Bitcoin's price half. "I expect more volatility," he said. "I'm just saying short-term bearish. And don't expect prices to repeat past halving."
Woo explained that when prices fall, weak miners go out of business, causing the market to bottom out. This time, it’s from $14,000 to $7,500, “which is killing weak miners who are dying. This adds to already bearish action, so it’s not a good 6-month-old due to selling pressure.”
Another analyst, Cole Garner, also sounded the alarm, saying there were signs that miners had “capitulated.” He explained that "capitulation" occurs when "small miners get stuck at a time when BTC is low and using outdated hardware," adding that "the most likely reversal outcome is: cash Miners who are in short supply are gradually selling BTC.”Although we have been on the verge of reversals, reversals are rare, and this has only happened twice in the past four years”
Garner mentions five meanings:
If the price is snowballing, then this is a great buying opportunity;
If Bitcoin "surrenders", 95% of altcoins will be dumped;
After the decline bottoms out, there may be a lengthy triangle consolidation process leading to the halving;
Insufficient gravity after halving;
After that, more consolidation will follow, followed by a full-fledged bull market.
Meanwhile, a week ago we reported that the difficulty of Bitcoin mining had more than doubled this year, with major Bitcoin mining platform BTC.com predicting that after the next adjustment, the difficulty of Bitcoin mining will be around 10. It dropped another 5% within a few days, and the difficulty of Bitcoin mining dropped by 7.1% on November 8. A similar situation was seen last year, when the difficulty dropped by 7% in November, 15% and 9.6% in December. There are still two days until the next adjustment, and now the mining difficulty is estimated to actually increase by 1.21%.
