Bitcoin price on Thursday succumbed to bears attack, plunging below $20,000 once again, against predictions that the new rally had already started and that Bitcoin is now going to run toward the previous ATH.
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In today’s trading session, Bitcoin briefly dropped below $20,000 but then returned above $20,000 and is now consolidating at the support level. Unfortunately, there is not much of a volume on the trading pair, suggesting that investors and traders are not yet ready to support another rally, not short the digital gold.
Why is Crypto Market Struggling In June?
Here Are The Reasons.
Bitcoin miners have been forced to tap into their cryptocurrency stashes as a plunge in prices, rising energy costs and increased competition bite into profitability.
The number of coins miners are sending to crypto exchanges has been steadily climbing since June 7, researchers at MacroHive noted, in a sign that “miners have been increasingly liquidating their coins on exchanges.”
Several publicly listed bitcoin miners collectively sold more than 100% of their entire output in May as the value of bitcoin tumbled 45%, an analysis by Arcane Research found.
Bitcoin miners, who run networks of computers to earn tokens by validating transactions on the blockchain, are typically staunch crypto “HODLers” and collectively own around 800,000 bitcoins, according to CoinMetrics data.
The crypto mining space rapidly expanded in 2021 as bitcoin more than quadrupled in value, but this growth has further pressured margins as the process is designed to grow more difficult as the number of miners increases.
“Over the past six months, hash rate and mining difficulty have increased while the price of bitcoin has dropped. These are both negatives for existing miners as both work to compress margins,” said Joe Burnett, analyst at bitcoin mining firm Blockware Solutions.
High energy prices are also hitting miners, which by some estimates use more electricity than the Philippines, according to the Cambridge Bitcoin Electricity Consumption Index.
“If you’re not at a very low-cost electricity area at this point, you’ve got to shut down,” noted Chris Brendler, senior research analyst at D.A. Davidson
The sudden return of buying power on the market is unlikely to happen without significant drivers on the traditional financial market, which means that Bitcoin will rally only with the help of retail investors and whales.
Because of the absence of inflows on the market, additional pressure on BTC could lead to a catastrophic price drop and expose investors to even higher risks.
As for now, the volatility on the cryptocurrency market remains low experts believe.