The virtual currency market continues to be sluggish
Since July this year, the price of Bitcoin has continued to fluctuate between $55,000 and $70,000. During this period, Bitcoin once rose to $69,799, but quickly fell back. Many institutions predict that in the absence of a strong catalyst, the price of Bitcoin will continue to fluctuate in this range in the coming months.
Zhao Wei, a senior researcher at the OKX Research Institute, told a reporter from the China Securities Journal that according to OKX market data, Bitcoin has fallen for four consecutive days, and the current Bitcoin price is still in a downward channel. Recent changes in the global economic environment and fluctuations in the US dollar exchange rate have had a significant impact on the market, and speculation has also led to sharp fluctuations in currency prices. The virtual currency market will be affected by many aspects such as supply and demand, policies and regulations, global economic cycles, traditional financial markets, etc. Its price trends also show high volatility and sensitivity. Subsequent market trends still require close attention to macroeconomic factors such as U.S. interest rate cuts.
Industry insiders pointed out that today's sell-off caused the price of Bitcoin to fall back below the 50-day and 200-day moving averages (EMA). Market indicators such as exchange inflows, momentum, and the market value to realized market value ratio (MVRV) of short-term holders all showed signs of slowing market momentum and increasing selling pressure.
A research report by Coinbase, a virtual currency trading platform, pointed out that historically, the virtual currency market has shown a continuous downward trend in August, with reduced market activity, insufficient liquidity and a sharp drop in the value of major virtual currencies. It is expected that the price of Bitcoin will fluctuate between US$61,000 and US$70,000 in August.
Grzegorz Drozdz, a market analyst at payment platform Conotoxia, said: "In recent months, the virtual currency market has been in a downturn. Previously, there was a surge in capital inflows into the market, which can be measured by the capitalization of stablecoins, but the capitalization of stablecoins has frozen in the past two months."
Bitcoin "miners" income drops sharply
The decline in the virtual currency market is mainly due to the continued selling of "miners" whose income has plummeted. Since the halving of the Bitcoin "mining" reward, many Bitcoin "miners" have fallen into financial crisis.
On April 20, Beijing time, Bitcoin completed its fourth halving in history, with the mining reward of the Bitcoin network halved from 6.25 Bitcoins to 3.125 Bitcoins. The halving event has a significant impact on the income of Bitcoin "miners". The income of Bitcoin "miners" mainly comes from two sources: mining rewards and transaction fees. The halving event directly affects the mining rewards of "miners", however, the operating costs of "miners", such as electricity bills and equipment costs, will not be reduced.
Research firm Kaiko said the virtual currency market could face greater selling pressure as the income of bitcoin "miners" who hold large amounts of virtual currency assets drops sharply.
Data from CryptoQuant shows that "miners" are accelerating the sale of their Bitcoin reserves in recent days. The daily Bitcoin outflow from "miner" wallets has reached the highest level since May, indicating a large-scale "miner" sell-off.
Since mid-July, the share prices of several bitcoin miners, including Marathon Digital and Riot Platforms, have entered a downward channel. On August 1, local time, bitcoin mining company Marathon Digital released its second-quarter earnings report, showing that its revenue for the second quarter was $145 million, which fell short of Wall Street's expectation of $158 million; its net loss was $199 million. Marathon Digital said in its earnings report that some operational challenges hampered its ability to mine bitcoin, and the bitcoin "halving" effect put pressure on the "mining industry," resulting in a hit to sales in the second quarter.
On July 31, local time, Bitcoin mining company Riot Platforms released its second quarter performance report. The report showed that the total revenue in the second quarter was US$70.02 million and the net loss was US$84.45 million. The output of Bitcoin "mining" fell from 1,775 in the second quarter of 2023 to 844, a year-on-year decrease of 52%.
In addition, the current situation of oversupply in the Bitcoin mining machine production market is prominent, and the undercurrent of overcapacity has gradually surfaced. According to data revealed by a supply chain, some well-known mining machine manufacturers have a large backlog of chip orders, and it is expected that about 5 million mining machines will be waiting to be put on the market by next year. Once these mining machines are put into production, the computing power of the entire network is expected to increase by 1300EH/s. The large-scale computing power growth will directly lead to a significant decline in the income of "miners", especially when the direction of the currency price trend is unclear, the payback period of "miners" will be more pessimistic.
