- Bitcoin’s price has fallen significantly in recent days, exceeding the average cost basis of short-term holders
- Miner revenue fell, which could increase selling pressure on BTC miners
Bitcoins [BTC] the recent dip below the $60,000 mark sent shockwaves through the crypto sector, leading to extreme market uncertainty and massive liquidations.
Will short-term holders show paper hands?
Before Bitcoin recovered a day later on May 2, it closed at $57,700, slightly below the average cost basis of short-term holders, which stood at $58,500. This meant that the price of BTC fell below the average acquisition cost for short-term holders.
When this happens, the most immediate consequence is unrealized losses for short-term holders. Since their average purchase price is higher than the current price, they will technically lose money on their investment if they sell. This can lead to panic selling and further exacerbate the market decline.
However, for optimistic short-term holders with a strong belief in Bitcoin’s long-term potential, this price drop can also be seen as a buying opportunity. They can lower their cost basis by buying more Bitcoin at a lower price.
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It remains to be seen how these short-term holders will be affected by the decline in the price of BTC.
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Another factor that could affect the price of BTC and the selling pressure on the king coin is the condition of the miners. Over the past month, miners’ incomes have fallen significantly. If miners continue to see this trend, they will be forced to sell their BTC holdings to remain profitable. This could increase selling pressure on miners and could negatively impact BTC in the long run.
Source: Blockchain
The overall hashrate for Bitcoin also dropped significantly. For miners who remain active, a lower hashrate can mean less competition. This can translate into easier block detection and potentially higher profits, especially if the price of Bitcoin remains the same.
Only time will tell if Bitcoin miners can remain profitable in the future.
Source: Blockchain
Activity on the network
Finally, one factor that will play a big role in helping miners stay afloat will be the overall activity on the Bitcoin network. This is because miners can collect transaction costs due to the activity.
AMBCrypto’s analysis of Santiment’s data showed that activity on the network has remained the same in recent days – a positive for BTC in the long term.
Source: Santiment