After a long crypto winter Bitcoin Miners and average BTC investors are now back in the black, so a report today by blockchain intelligence agency Glassnode.
Bitcoin rallied over the weekend and is now trading above $20,000 for the first time since Sam Bankman-Fried’s FTX spectacularly collapsed. This means that it is now once again profitable for mining companies to run the expensive hardware required to mine the Bitcoin network. It also means that your average bitcoin hodlerif they were to sell their stock now, they would no longer be selling at a loss.
Glassnode estimates that Bitcoin’s “realized price,” the average price current investors have paid for BTC, is around $19,700. The average price Bitcoin has traded at over the past 155 days is $18,000, says Glassnode. Either way, Bitcoin is now trading well above that level and is changing hands at more than $21,000 today.
The rally means miners are also getting some relief, the analytics firm notes. Bitcoin mining is the use of computing power to solve the complex mathematical equations required to create new bitcoins. According to Glassnode, mining Bitcoin currently costs around $18,800. With bitcoin now trading above $20,000, it means the average mining company can operate again and actually turn a profit.
Bitcoin’s price surged last week after news that U.S. inflation rates have started to cool. The Federal Reserve raised interest rates throughout 2022 to quell record-high inflation in the United States, sending risk assets across the board down, including stocks and bitcoin.
The Fed last hiked rates by 50 basis points in December—a more modest increase compared to several 75 basis point hikes throughout the year. The Bureau of Labor and Statistics said in its CPI report on Thursday that December inflation fell to 6.5% from 7.1% in November. This appears to have helped investors gain confidence that the Fed may be on track to ease tightening.
Rate hikes throughout 2022 contributed to a brutal crypto bear market. And as Bitcoin’s price plummeted, scores of over-leveraged companies took a hit, including Celsius, Voyager, and Three Arrows Capital.
By far the biggest collapse came in November, when the once-dominant FTX imploded on the stock market after a bank run. The liquidity crisis forced the company to admit that customer funds were not fully secured on the platform, freezing withdrawals and eventually filing for bankruptcy.
Now that FTX founder Bankman-Fried is awaiting trial on eight financial crimes and the Fed is taking its foot off the gas, crypto investors may have reason to be bullish again.
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The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment or other advice.
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