Bitcoin mining profitability has plummeted by more than 75% from its peak and is now at its lowest level since October 2020. Bitcoin’s price tumbled to a 52-week low of $20,800 on Wednesday, a drop of almost 70%. Despite the fact that the price has since rebounded above $21,000, several market indicators suggest that bears are in control of the current market.
The number of Bitcoin Miners to Exchange Flows, a measure that indicates the amount of bitcoin supplied by miners to cryptocurrency exchanges, reached a seven-month high of 9,476. The increase in exchange flows suggests that miners are now selling their bitcoins in preparation for the price to drop.
The actions of the BTC miners are generally reflective of the broader market sentiment, with most BTC miners selling to avoid losses on their mining rewards. The significant drop in mining profitability is supported by the increasing number of Bitcoin miners who are selling. Since its peak in July 2018, mining profitability has plummeted 75%. nBitcoin’s hash price currently sits at $0.0950/TH/day, which is the lowest point since October 2020.
The miner netflow has also turned positive to exchanges. When the miner netflow is up, it indicates that more coins are being delivered to exchanges than personal wallets. Such activity might signal that miners are bearish on the price and seek to offload their holdings.
The value of Bitcoin has plummeted to around $17,000. If the price doesn’t rebound, many BTC mining rigs will go bankrupt and be shut down. Following BTC’s price movements, the overall market capitalization dipped below $1 trillion.
BTC has spent the previous decade in a number of bull markets, each of which was followed by an 80-90% drop from the top. However, the BTC price has never fallen below its all-time high from the prior cycle. BTC is presently trading at close to its 2017 high of $19,783, and any potential selling may lead to it returning to 2017 levels.
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