Bitcoin price is about to dump violently?

The stagnation of the cryptocurrency market has made Bitcoin price tumble. The price is in danger of falling further, as it struggles to recover beyond major resistance levels. The descending price increases the probability of ‘miner capitulation,’ which is believed to have triggered the plunge in December 2018.

Bitcoin dump

‘Miner capitulation’ occurs in the Bitcoin market when mining is no longer profitable. As profits fall, miners automatically sell their Bitcoin holdings, a response to worsening market sentiment. If miners start sell-off, it creates significant selling pressure in the market, creating a challenging environment for crypto to maintain momentum.

Large mining centers and companies cannot afford to surrender because of short-term price drops, because they hold long-term contracts with electricity suppliers while they also have more capital to deal with market instability for a long time.

Smaller miners are more likely to surrender in the short term. Major mining companies closing down, in turn, could lead to a death spiral in which the hash rate of the Bitcoin network drops to near zero.

However, researcher Andreas Antonpoulos said that a death spiral or a sudden drop in the hash rate of the Bitcoin network is almost unlikely due to miners operating in long-term view and strategy.

When Bitcoin price is clearly in a stress-relieving trend after leaping to $ 10,600 on October 26, many technical analysts expect prices to continue to plunge to the $ 5,000 – $ 6,000 area.

Crypto trader Eric Thies said an important bearish indicator was blinking. He tweeted on December 01 that BTC could be set for a rebound after tweeting that the outlook is not great.

Miners are in trouble

The breakeven price of Bitcoin mining is estimated at $ 4,100 to $ 4,500. According to Miner Hut8, a publicly listed mining giant based in Canada, the company mined Bitcoin for $ 4,300 during the third quarter.

However, cryptocurrency researcher Ceteris Paribus noted that the mining cost calculated by Miner Hut8 leaving behind depreciation, net financial expenses and costs, could set the actual mining cost at $ 7,100. la

Halving will not take effect immediately

One of the most anticipated events in 2020, which will theoretically affect the Bitcoin price trend, is halving (taking place in May 2020). After the halving takes place, the reward for the miners will be halved. It also slowed down the production of new BTC when the network approached a fixed supply of 21 million Bitcoins.

However, senior investors have said that halving may not have an immediate effect on Bitcoin price.

Current price trend of Bitcoin

Based on the fundamentals, Bitcoin is still active in user activity, the transaction value is calculated in dollars and hash rates. On-chain data from Blockchain.com shows that the number of unique addresses used has increased from 310,000 in January 2019 to nearly 500,000 in less than 12 months. The hash rate has also increased, from 41 exahash in January to 92 exahash, more than doubling in the same period.

Source: blockchain.com

Bitcoin investor Timothy Petersen said the 2019 Bitcoin bubble could explode in about two weeks, marking a potential at the end of the year. Therefore, if BTC starts to show a sharp sell-off in the coming weeks, the most potential cause will come from smaller miners. Capitulation is also seen as a positive point for medium and long-term recoveries as it often marks the end of a bear market and the beginning of the accumulation period.

However, before entering the bull phase, an indicator shows that the Bitcoin price may soon dump violently.

The Bitcoin long/short ratio on Bitfinex has been higher than 4 in some cases so far.
Each time this ratio is above 4, the dynamics of price reduction are followed by different intensities. The current ratio is 4.8. Assuming the same price model will continue, we will soon see the price decline.

Large Bitcoin transfers are not surprising, but recent movements have caused some concern. On December 6, AZCoin News reported that in about 15 minutes, nearly $ 10 billion of BTC was transferred between addresses. Large BTC transfers often precede discounts, except for tether transfers.

Trader Filb Filb stated that Bitcoin long orders had skyrocketed on the Bitfinex exchange, especially considering their ratio to short.

The current number of long orders is 36,755. Although a large number of long orders has resulted in a price reduction each time, the extent of decline and the direction of the long-term trend cannot be determined by this factor.

Disclaimer: This is not trading advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.

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