Bitcoin‘s (BTC) recent drop below the $60,000 level has sent shockwaves through the cryptocurrency sector, leading to significant uncertainty and major liquidations. A day after the drop, Bitcoin closed at $57,700, slightly below the average cost base of short-term holders at $58,500.
BTC’s Panic Sales
This situation could mean that the BTC price has fallen below the average purchase cost for short-term holders. When this happens, the most immediate consequence for them is unrealized losses. Since their average purchase prices are higher than the current price, selling would technically result in a loss of their investment. This could lead to panic selling and further intensify the market downturn.
However, for short-term optimistic investors who have a strong belief in Bitcoin’s long-term potential, this price drop could also be seen as a buying opportunity. By purchasing more Bitcoin at a lower price, they can lower their average cost bases. How short-term holders will be affected by the drop in BTC price will be shown in time. Another factor that could affect the selling pressure on Bitcoin’s price is the situation of the miners.
Bitcoin’s Santiment Report
Last month, the revenue collected by miners significantly decreased. If miners continue to see this trend, they may be forced to sell BTC tokens to remain profitable. This could increase the selling pressure on miners and negatively affect BTC in the long run. Bitcoin’s total hashrate has also significantly dropped. For the miners that remain active, a lower hashrate means less competition, which could lead to easier block discovery and potentially higher profits, especially if the Bitcoin price remains the same.
Only time will show whether Bitcoin miners will remain profitable in the future. Finally, a major factor that will help miners stay afloat will be the overall activity on the Bitcoin network. This is because miners can earn transaction fees due to network activity. An analysis by cryptocurrency analytics firm Santiment revealed that network activity has remained the same in recent days, which could be a positive development for BTC in the long term.
