Key Points
- Bitcoin’s price fell below the average cost of acquisition for short-term holders, leading to potential unrealized losses.
- Miner revenue has declined, which could increase selling pressure on Bitcoin.
Bitcoin’s [BTC] recent dip below $60,000 caused a stir in the crypto-sector, leading to significant market uncertainty and massive liquidations.
On 2 May, Bitcoin closed at $57,700, slightly below the average cost basis of short-term holders, which stood at $58,500. This means the price of BTC fell below the average cost of acquisition for these holders.
Impact on Short-term Holders
When Bitcoin’s price falls below the average acquisition cost, short-term holders face unrealized losses. If they sell their holdings, they will technically lose money, which can lead to panic selling and further market decline. However, some optimistic holders may see this as a buying opportunity to average down their cost basis.
Miners’ Revenue Declines
The state of miners could also impact BTC’s price. Over the past month, miner revenue has significantly declined. If this trend continues, miners may be forced to sell their BTC holdings to stay profitable, which can increase selling pressure.
The total hashrate for Bitcoin also fell significantly. For active miners, a lower hashrate means less competition, which can translate to easier block discovery and potentially higher profits if Bitcoin’s price remains stable.
The overall activity on the Bitcoin network will play a crucial role in helping miners stay afloat, as miners can collect transaction fees due to the activity. The network activity has remained the same over the last few days, which is a positive sign for BTC in the long run.
