Bitcoin is Breaking Down While the Hash Rate Marks new ATH, Are the Bottoms In?

The bitcoin price is heading to form new bottoms, as after rebounding a couple of times, it dropped below $16,000 and formed new yearly lows at $15,476. The capitulation period, which is speculated to have begun with the fresh sell-offs, is expected to drag the BTC price lower as the MVRV ratio has plunged below 0.6. 

The ratio has plunged to these levels only a couple of times in the past decade, in Jan 2015 and December 2018. Meanwhile, the capitulation appears extremely high but the possibility of a bullish reversal from the bottom appears high. 

With the recent drop in the prices, the traders are experiencing huge losses and they may be compelled to liquidate their assets at a loss. As per the on-chain data provider, Santiment, the network has recorded the lowest amount of BTC transactions in Profit since 2019.

The BTC ratio of daily on-chain transaction volume in profit to loss has slashed to -0.390 from the levels within the positive range. Meanwhile, the ETH ratio also has dropped to -0.30, indicating that traders facing extreme losses at the moment. 

The BTC long-term holders were at loss for a pretty long-time. However, the rise in the BTC hash rate, which marked new highs, has made it more difficult for the miners to sustain. The Bitcoin hash rate, which determines the total computing power required to mine and process the transactions on the blockchain, has marked new highs. 

With a rise in the BTC hash rate to 316 TH/s, the miners may now face actual pressure as they appeared to be hoaxed at the present prices. Hence, many may be compelled to sell their holdings to compensate for the mining activities. 

Collectively, Bitcoin’s (BTC) price appears to be in extreme danger as all the technical & on-chain indicators point toward a bearish close for the month. Meanwhile, some volatility may be expected as the trade approaches the end of the yearly trade, but if the bulls remain aloof, the price may eventually mark a bearish close for the year 2022.