Bitcoins [BTC] short-term holders were forced into the deepest stress phase of the cycle during the recent price drop to $59.1K. At the time, whales faced short-term unrealized losses of $16.4 billion, increasing the risk of capitulation and helping to explain weak market sentiment.
However, it is worth noting that Bitcoin’s valuation has not reached historical capitulation extremes. Investors should therefore note that further losses may be possible in the coming months.
Crypto analyst Darkfost highlighted the weak demand in the current market environment. The accompanying chart shows that Bitcoin ETFs have suffered their deepest decline ever.
An estimated $10.5 billion in Bitcoin ETFs has exited since October 12. This reflected the scale of the capital exodus, the analyst wrote.
AMBCrypto had covered the impact of ETF flows on market prices. The report also noted that investors should keep an eye on not only ETF flows, but also other on-chain metrics to assess trends in crypto assets.
The Weakening Position of Bitcoin Miners
The 30-day average of the Puell Multiple fell to 0.74 from 0.83 at the end of May. The statistic tracks the ratio between miners’ daily earnings and their annual average value.
The Puell Multiple fell to 0.58, and the decline in the monthly average reflected a compression in daily income due to falling prices.
According to analyst Axel Adler Jr, the 0.50 Puell Multiple threshold marked the start of mass equipment shutdowns in 2022. The metric was quickly approaching this threshold.
Miner Capitulation measures the percentage change in the price of Bitcoin since the last decline in network issues. Negative numbers imply declining prices since the last difficulty adjustment.
The statistic stood at -21% at the time of writing, well below the -15% threshold that marks a heavy squeeze on miners. More severe conditions, signaled by increasingly negative readings on the above metric, can also indicate mass equipment shutdowns.
The two miner statistics pointed to increasingly difficult conditions for Bitcoin miners. The severe capital outflows in recent months and prevailing bearish momentum and market sentiment could also worsen BTC’s situation.
Final summary
- Bitcoin ETFs have suffered their deepest decline ever.
- The miners’ capitulation has not yet arrived, but they are under great pressure and deteriorating conditions could result in the shutdown of mining equipment, such as in 2022.