The post Bitcoin Miners Face Risk of Capitulation as Profitability Dips into Extremely Underpaid Zone appeared on BitcoinEthereumNews.com.

Bitcoin miners are currently facing significant challenges as the market shifts, putting many at risk of capitulation amid declining profitability. The recent drop in Bitcoin’s price has compounded existing profitability issues, potentially leading to market instability. As noted by analyst Frost from CryptoQuant, “Miners are extremely underpaid right now, risking miners’ capitulation.” This article explores the current challenges faced by Bitcoin miners due to declining prices, signaling an impending capitulation risk. The Plight of Bitcoin Miners Amid Falling Prices Bitcoin miners are facing a critical situation characterized by drastically reduced margins due to a recent downturn in Bitcoin’s price. Following Bitcoin’s all-time high (ATH) of $109,000, a drop of approximately 11.28% has left many miners grappling with unsustainable operational costs. This sharp decline has triggered fears of capitulation as miners’ profit-loss sustainability enters what analysts describe as the extremely underpaid zone. Source: CryptoQuant Since the recent ATH, Bitcoin miners have experienced increasing difficulty and operational costs, exacerbated by higher mining difficulty rates instituted during the April 2024 halving. Despite a growing hash rate, indicative of escalating competition, the profitability trajectory remains bleak. Source: CryptoQuant This scenario is symptomatic of broader market turbulence; historical patterns indicate that when the profit/loss ratios for miners turn negative, it often precedes a bullish rebound in BTC prices. However, this rebound may necessitate substantial selling pressure from miners aiming to cover their costs. Source: CryptoQuant The situation has resulted in record highs for miner-to-exchange transfers, indicating a trend where miners are diverting their assets to exchanges at an increased rate. Recently, the total net flow for miners turned positive, suggesting higher rates of BTC sales as miners attempt to manage their cash flow. Source: CryptoQuant The operational strain on miners could lead to temporary capitulation, as has been observed in previous market cycles. This could…

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Filed under: News - @ February 8, 2025 12:13 am