Bull markets are driven by a shortage of supply on the market. Now there is reason to believe that demand could soon outstrip supply again.
Bitcoin (BTC) has been trading in sideways mode for the last two months. After the # 1 cryptocurrency hit the 30,000 mark for the first time on May 19, Bitcoin was unable to really break out of the channel between $ 30,000 and $ 40,000.
This is unlikely to change in the short term – although BTC is listed in positive territory at the time of writing. However, a meager 1.6 percent over 24 hours is not a trend reversal.
The market as a whole is also continuing its crab: the market capitalization has increased by two percent since yesterday. At 1.5 trillion US dollars, however, it is at the same level as in May of this year. Or to put it another way: A bullish trend reversal is not yet in sight.
The situation brings back memories of May 2020. Back then, Bitcoin traded between $ 9,000 and $ 10,000 in no man’s land for months. In the end, however, the bulls should gain the upper hand and BTC started its first bull run in years, which raised the cryptocurrency to over 60,000 US dollars.
Mining always more profitable
After all: the mining seems to be really worth it again. Because since the difficulty, i.e. the relative difficulty of finding the correct hash for the new block, has decreased, it has become much easier for miners to run their business profitably again. The reason is the large migration movement of the mining industry from China – digging for digital gold was prohibited across the board.
But for the remaining miners on the market, the business is now much easier and more lucrative. As Glassnode data shows, the profitability of the mining rigs also increased significantly with the last Difficulty Adjustment on July 3rd.
In addition, mining companies don’t seem to be throwing their newly mined BTC stocks (currently 6.25 BTC per block) on the market straight away. For the first time in the history of cryptocurrency, miners are preparing to become hodlers. This is also suggested by data from Glassnode.
The orange chart shows UTXOs that have never been issued. This includes Satoshi’s digital gold treasure but also freshly minted Bitcoin that have not left the wallets of its producers. The curve of the chart has always been falling so far – miners have thrown more BTC on the market than hodln. This has changed now. If the miners continue to be among the net hawkers in the future, this will of course have an impact on price pressure on the market. Or to put it another way: the supply is becoming scarcer.