Bitcoin markets in freefall
There's some evidence of miner capitulation in today's Bitcoin bloodbath.
At the time of writing, Bitcoin is in freefall, at US$6,800.
This cryptocurrency crash was brought about by news of a renewed crackdown on cryptocurrency exchanges in China. Or, as they're incorrectly saying in the less crypto-oriented media, Bitcoin is plunging and no one knows why.
The abrupt drop to $6,750 brings Bitcoin to a new six-month low, and according to the magic 8 ball, the "outlook [is] not so good" for the markets right now. Traders are divided on which way things will go next, but it's clear that Bitcoin's current prices of $6,700 represent a dramatic shift from the norm of the last half year.
But the general consensus is that it's still too soon to panic. While there's some talk of yearly lows being on the cards again, the magic 8 ball has described this as a "very doubtful" outcome.
The timing of the plunge has also put question marks around Bitcoin mining profitability, and where Bitcoin's hashrate and difficulty may go now, as the Bitcoin halving comes closer.
The halving, or "halvening" if you're feeling cute, is when Bitcoin's emission rates are decreased by 50%. It's about half a year away and will see block rewards for miners drop from 12.5 BTC to 6.25.
To capitulate or not to capitulate
When people talk about Bitcoin miners capitulating, they're referring to the miners switching off unprofitable machines to cut their losses. This is generally seen as a very pessimistic sign and an indication that people expect Bitcoin to fall even lower than its current prices of $6,650.
But right now, it's "hazy" whether miners are capitulating, the 8 ball explains.
On the other hand, Bitcoin's hashrate should increase steadily as long as mining is profitable. Even a flattening out of hashrates can be seen as evidence of capitulation, and that's exactly what's happened. At its current price of $6,700, it's not profitable for everyone.
As one analyst observes, the one- and two-month hashrate growth lines have crossed, so there's definitely at least a bit of miner capitulation.
"It is decidedly so," the magic 8 ball agrees.
What this means for next year's halving remains to be seen, and it depends largely on where Bitcoin prices go between now and then.
It could actually be quite interesting. If prices drop back to $3,000 and then the halvening hits, there's a risk of low hashrates combined with a lot of unused mining equipment, which may be a dangerous combination of circumstances for the Bitcoin network.
However, that's still much more of a theoretical than actual hazard at the moment. Bitcoin prices are currently sustaining at $6,750, so there would have to be another momentous drop for that to happen.
Still, you "cannot predict now" which way Bitcoin prices go next, the magic 8 ball says.
Disclosure: The author holds BNB and BTC at the time of writing.
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