- Currency inflows fell significantly despite high BTC prices.
- Miners’ earnings fell as the hashrate increased.
Bitcoin [BTC] has seen quite a rally in recent weeks, with prices crossing the $30,000 mark. However, press time inflow data suggested that optimistic traders should be wary in the coming weeks.
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The state of the inflow
According to Glassnode, Bitcoin inflows totaled $2.3 billion at the time of writing. This observation suggested widespread contraction in the industry.
In particular, foreign exchange deposit activity had slowed compared to the 2021 bull market, which saw peak inflows of $12.2 billion.
Source: Glassnode
The low exchange rate inflows could negatively impact Bitcoin by reducing liquidity and trading activity. With reduced deposit volumes, there may be limited buying pressure and potential price stagnation.
Lower market participation and reduced activity can lead to reduced price volatility and may act as a barrier to short-term price growth.
Take it out
Another factor that could negatively affect Bitcoin is selling pressure on miners. Glassnode’s data indicated that Bitcoin’s Hash Rate continued its aggressive expansion, hitting an all-time high of 395 EH/s.
A high hash rate can have negative consequences for Bitcoin miners. It leads to more competition between miners, reducing their chances of successfully mining a block and earning rewards. This increased competition also results in lower individual profitability, as mining rewards are distributed among a greater number of participants.
Miners face increased operational costs due to the energy consumption associated with maintaining a high hashrate.
The #Bitcoin Hash Rate (7DMA) continues its aggressive expansion, reaching an ATH value of 395 EH/s.
This equates to 395 trillion guesses per second in an attempt to solve the block puzzle. pic.twitter.com/SX5bbjt5xV
— glassnode (@glassnode) July 10, 2023
At the time of writing, miners’ daily earnings had fallen over the past few days.
Source: BTC.com
State of BTC
These factors may negatively affect the price of BTC in the future, as declining mining revenues may incentivize miners to sell their holdings.
Read Bitcoin [BTC] Price forecast 2023-2024
Addresses have also had a high incentive to sell their holdings. The MVRV ratio for Bitcoin indicated that many addresses with BTC were highly profitable. At the time of writing, BTC was trading at USD 30,541. The price had seen little movement in recent days.
The direction the price of BTC will go will be determined by whether miners and addresses decide to succumb to the selling pressure.
Source: Sentiment