N Rotteveel/iStock Editorial via Getty Images
Bitcoin (BTC-USD) is on track to end one of its worst months so far this year as tightened regulatory scrutiny outweighed the positive news. The question is simple: will the slump continue or has it bottomed out?
The original and most expensive crypto (BTC USD) decreased by 10.5% in August through August 25 and reversed its rally after a court ruling in mid-July ruled that Ripple Labs (XRP USD) Sign is not security. At the start of the selloff, crypto traders suffered over $1 billion in liquidations as fears mounted that the Securities and Exchange Commission would delay its decision on approving spot bitcoin ETFs, among other regulatory hurdles and assuming that interest rates would stay higher longer.
Nominally, BTC fell to $25.6k on Aug. 22 – its lowest level in two months – from $29.1k on Aug. 16, a day before crypto swoon hit. It then briefly rebounded from the summer lows on August 23, as a number of riskier assets caught a bid, reaching as high as $26.5k, only to erase all those gains. Trading Friday afternoon, BTC was changing hands at $25.8k.
The August correction can also be attributed in part to selling pressure across the stock market, particularly the S&P 500 4.4% decline and the tech-heavy Nasdaqs down 5.7%, as seen in the Bitcoin USD (BTC-USD) chart below. Nikolaos Panigirtzoglou, an analyst at JP Morgan, noted that a report of Elon Musk’s SpaceX writing down its Bitcoin (BTC-USD) holdings in the previous quarter “acted as an additional catalyst for the correction in crypto markets.”
According to a client note on Thursday, Panigirtzoglou sees “limited downside risks for the crypto markets” in the near term. He noted that the open interest, or number of outstanding derivative contracts yet to be settled, in CME Group’s (CME) bitcoin futures contracts (BTC-USD) shows that recent liquidations of long positions ” appear to be in their final stages” and not their beginning.”
SA contributors Noor Darwish and Jason Appel laid out their bullish recommendations on Bitcoin (BTC-USD) ahead of the crypto sell-off.
Bitcoin miners are also suffering this month
Of course, this month’s Bitcoin (BTC-USD) weakness has also had its share of problems for token-mining companies. In fact, they are the five largest publicly traded bitcoin miners in the world [that is, Riot Blockchain (NASDAQ:RIOT), Marathon Digital (NASDAQ:MARA), Canaan (NASDAQ:CAN), Hut 8 Mining (NASDAQ:HUT) and Cipher Mining (NASDAQ:CIFR)] They lost a total of $2.8 billion in market cap compared to the previous month, according to a report by AltIndex published on Aug. 22.
On an M/M basis, shares of Riot (RIOT) fell the most of the group down 42.9%, followed by MARA (-35.5%), HUT (-35.4%), CAN ( -31.9%) and CIFR (-22.2%).
In addition to stock valuations, BTC miner sales are also taking a tumble this month. Global monthly crypto mining revenue fell from $865.2 million on July 23 to $455.1 million on August 23, according to the report, citing TheBlock data.
Bitcoin (BTC-USD) miner profitability has fallen in recent years as token prices have more than halved since their November 2021 peak, inflation has pushed up miners’ costs and global computing power continues to rise. As a result, miners are looking for new revenue streams, such as offering high-performance computing (“HPC”) services to the fast-growing artificial intelligence market, Panigirtzoglou explained in a separate statement.
SA analyst Mandela Amoussou spoke about Canada-based Hut 8 (HUT)’s efforts to diversify its business by attracting customers for its HPC services. “I think HUT will benefit from this diversification,” he said. “HUT could benefit from the growing demand for data center solutions, particularly in the areas of AI, data analytics and rendering, as the popularity of artificial intelligence and rendering continues to grow.”
More on the crypto market
Learn Crypto Trading, Yield Farms, Income strategies and more at CrytoAnswers
https://nov.link/cryptoanswers
Comments are closed.