After a prolonged decline throughout April, Bitcoin’s price is exhibiting resilience in May. Bitcoin ETFs are experiencing robust inflows once more. Contrasted with ETF holdings, public miners hold a relatively small amount of BTC on their balance sheets. This shift may render sell pressure from miners, once a trigger of bearish price action, a thing of the past. Additionally, network hashrate has surged to new highs, suggesting that the impact of the halving may have been short-lived. In this article, we will explore the following topics
Bitcoin Price Showing Strength
Steady Inflows Bitcoin ETFs
Miner Sell Pressure a Thing of the Past
Network Hashrate Marking Record Highs
Network Difficulty Becoming Less Volatile
Hashprice Hovers at Low Levels
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Bitcoin Price Showing Strength
Bitcoin’s recent price movements have been quite noteworthy. On May 20th, Bitcoin surpassed the $70,000 mark for the first time since early April. This price milestone is significant, especially after experiencing a 23.4% decline. The subsequent recovery, marked by higher highs and higher lows on the daily time frame, typically indicates a sustained bullish sentiment among traders and investors.
Steady Inflows Bitcoin ETFs
Bitcoin ETFs have seen a daily net inflow for two weeks in a row. Over the past two weeks, the average daily inflow was 3,000 BTC. The daily production of new Bitcoins is 450, meaning that the average daily demand from the ETFs was 6.76 times greater than the new Bitcoin supply.
Miner Sell Pressure a Thing of the Past
With ETFs as major buyers, the field of BTC holders has changed dramatically. In the past, a sell-off of Bitcoin holdings by public mining companies was believed to have a bearish impact on BTC price. Now, the public miner with the largest stack is Marathon Digital, holding 17,613 BTC, which is only 6.1% the size of GBTC’s holdings. Among the top 10 holders, MARA is the only mining company. If Hut8 or Riot Platform were to sell all of their holdings, the current inflow from the ETFs could absorb that selling pressure in a matter of days.
Network Hashrate Marking Record Highs
After witnessing a post-halving drop of 74 EH/s (11.3%) to 580 EH/s, the network hashrate surged back to a new all-time high. Two weeks after hitting this local bottom, a record high of 660 EH/s was measured on the 7-day moving average (DMA).
Miner Capitulation Coming to an End?
The 7-day moving average (DMA) indicates that the biggest impact of the halving event on network hashrate is already in the past. However, when looking at a longer timeframe, one could argue that miners are still capitulating. The 30-DMA hashrate dropped below the 60-DMA. According to the Hash Ribbons Indicator, this is a sign that miners are capitulating.
With the hashrate in the shorter timeframe reaching new all-time highs, it can be expected that this capitulation is short-lived. The capitulation phase after the third halving lasted 30 days, and currently, we are 18 days in.
Network Difficulty Becoming Less Volatile
Last week, network difficulty increased by 1.48%. The recent halving has impacted difficulty less than the third halving in 2020. In 2020, there was a significant swing down and up, whereas now adjustments have been more moderate.
In May 2020, network hashrate fell from 120 EH/s to 90 EH/s, a total drop of 30 EH/s or 25%. After the fourth halving, we witnessed a drop of 74 EH/s, almost 2.5 times larger in nominal terms but translating into a drop of just 11.3%.
As network hashrate grows, more nominal hashrate is needed to achieve the same percentage change. This is why difficulty adjustments post the fourth halving were less volatile compared to the third halving, despite a 2.5 times larger nominal hashrate decline.
Hashprice Hovers at Low Levels
Hashprice continues to hover at low levels. Despite the increase in difficulty, the historic low of $45/PH/Day was not breached again. Currently hashprice is around $55/PH/Day. With the recent increase in hashrate, BTC price needs to keep climbing to prevent new lows in the near future.
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