What Bitcoin miners gained as king coin reached $31k
- Miners opened long BTC positions after the price fell to $25,000.
- The broader sentiment remained bullish, but an analyst asked for caution.
According to CryptoQuant analyst SimonaD, Bitcoin [BTC] miners, in an attempt to cover the rising cost of operations, might have gained significantly from the coin’s rise to $31,000. In shedding more light on this, SimonaD pointed to the correlation between the mining difficulty and the miner-to-exchange flow.
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Bitcoin’s mining difficulty serves as an indicator of the complex cryptographic puzzle needed to mine a block and secure the network against attacks. Just last week, the mining difficulty reached an All-Time High (ATH).
Covering the cost of loopholes
The spike suggested that more miners had come into the network while making individual profitability more challenging.
While miners could generally make more in fees thanks to the increased Bitcoin Ordinals participation, the analyst pointed out that miners’ exchange flow had been increasing since BTC’s fall to $25,000.
This led the analyst to conclude that miners open several long positions and benefited from the price rise to $31,000. She pointed out that,
“We can notice that the activity of miners on derivatives exchanges was constant and even intensified in the last weeks when difficulty reached its ATH.”
On looking at the Puell Multiple, Glassnode showed that the metric was increasing and had even surpassed the green area at press time. Typically, this metric looks at the supply side of the Bitcoin economy while measuring miners’ participation and revenue.
Therefore, the hike suggests that Bitcoin’s daily issuance value has been extremely high. And as a result, this has produced outsized returns for miners who bought at the time the price decreased.
Another chance to gain if…
Despite the profits miners may have made, revenue remained somewhat abysmal. However, traders in the derivatives market seem to consider BTC’s price above $30,000 as another opportunity to long the coin.
This was because the Bitcoin long/short ratio was 1.03. This ratio is derived by dividing the number of long positions by the number of short positions.
And when the long/short ratio is high or above 1, it means that the market sentiment is bullish. If it was the other way around, it means that the broader market sentiment is bearish.
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Additionally, analyst and MN Trading founder Michaël van de Poppe opined that BTC could retrace to $28,000. Poppe based his analysis on the liquidity, highs, and lows of the BTC price in recent times.
However, he noted that the coin would need to reclaim $30,500 for another rally to be confirmed. If not, a drawdown could be in line.
Good run to the highs, taking liquidity, reversing, taking liquidity and now back in the range.
Everything is reset.
— Michaël van de Poppe (@CryptoMichNL) July 6, 2023