Note that Bitcoin is looking good today. The cryptocurrency is trading in the $21,400 zone this morning, the equivalent of almost 4 per cent growth overnight.

Bitcoin’s 15-minute chart

However, the coins are still in deep crisis according to last month’s results. Here are the percentages of change in their exchange rates.

Changes in cryptocurrency rates over the past month

Contents

  • 1 Bitcoin and 1-week chart
  • 2 Stocks in freefall
  • 3 What’s happening to miners?
  • 4 Losses have hit everyone
  • 5 Panic breaks all records

Bitcoin and the 1-week chart

As a reminder, earlier, some experts said that BTC’s collapse below $20,000 would end in a string of new troubles for the cryptocurrency. However, on the scale of the 1-week chart, Bitcoin closed its last candle above that line.

Bitcoin 1-Week Chart

Former BitMEX CEO Arthur Hayes was cautiously optimistic about this fact. On his Twitter account, he stated that Bitcoin’s short-term decline as low as $17,600 last week was due to forced selling of the asset, as is often the case when liquidating margin positions of large traders.

Large volumes in trading on the decline indicate a serious liquidation of positions, Hayes believes

Liquidation is the forced closing of a trader's position if it uses borrowed funds from an exchange. In this case, the implication was the closing of longs, i.e. the forced mass sale of bitcoins.

Stocks in free fall

According to crypto analyst Josh Rager, the correlation between Bitcoin and the stock market remains as strong as ever. This means that any negative movement in stock trading will be just as painful for the price of BTC.

The stock markets of the world and bonds are now in almost one of the worst positions in their history, with the result that this quarter could be the most negative quarter for them in terms of returns in decades.

Returns on stocks and bonds by quarter

The problem is also that only the world’s largest financial institutions – and to a large extent the US Federal Reserve – can turn the stock market around. But the Fed’s experts’ outlook is still bleak: they have to raise the benchmark lending rate to combat record inflation in America, and the U.S. economy itself is likely to go into recession soon.

What happens to miners?

It’s impossible to figure out the exact cost of mining 1 BTC for every miner, because it depends on the activity, capital, electricity prices in different regions and so on. However, analysts at Glassnode confirm that some miners still had to sell their stock of coins to recoup their costs after the market decline. Here’s a relevant cue from the experts.

Miners sold about 9 thousand BTC from their vaults just this week, now they have about 50 thousand BTC left.

Many of the larger miners may continue to operate, meaning that they are in much worse conditions economically. Galaxy Digital calculates that the cost of mining BTC for “whales” is closer to $10,000 than current price levels.

Cost of Bitcoin mining for a large firm

Most interestingly, Bitcoin’s hash rate and complexity as a whole continue to rise: this means there has not yet been a major exodus of miners from the market, and most continue to do business.

Bitcoin mining hash rate and complexity

This is a positive fact for the cryptocurrency network as a whole, as it is still protected from possible attacks. But for amateur miners who focus on bitcoin mining, the news is certainly not good - many of them may simply not be able to compete with the big players and have to cease activity.

Losses hurt everyone

Glassnode said that a great many traders and investors of all ranks had to suffer financial losses amid the market crash. Here’s the relevant rejoinder.

Almost all categories of cryptocurrency wallets – from relatively small “shrimpers” to large “whales” – are now suffering huge unrealised losses. They are even worse than they were in March 2020. The least profitable category of wallets with values between 1 and 100 BTC have lost an average of 30 per cent of their investments.

Unrealised losses among different cryptocurrency wallet categories

And the so-called HODL Waves indicator, which groups coins by how long ago they last moved, captures a very sharp spike in trading activity. The changes can be seen on the right side of the chart here.

HODL Waves indicator

Between June 13 and June 19, the percentage of total BTC volume that last moved between one day and one week rose from 1.65 percent to nearly 6 percent.

Panic breaks all records

The Alternative’s Fear and Greed Indicator says that right now the average trader is in a panic like no other time in the history of the industry. On 19 June the index fell to a record low of 6 points out of 10. The index has only been this low in August 2019.

Market sentiment dynamics


The overall conclusion from all of these aspects is that the crypto market is currently driven by fear and uncertainty. It is very much dependent on the US stock market, so it can be used as a benchmark for forecasts about crypto's recovery. But the good news is that after such crashes, crypto usually goes into a hoarding period, so investors will have plenty of time to buy in "cheap" bitcoins.

We believe that predicting a single vector of further development for the cryptocurrency niche is simply impossible. With this in mind, investors need to be prepared for anything as before. Otherwise, financial losses in the worst-case scenario could be literally irreplaceable.