Bitcoin Network Turns Red Following the Bull Run
The crypto market has turned red over the weekend.
Altcoins are recording losses in tandem with Bitcoin, which dropped to nearly $15,700 level today.
At the time of writing, we are still just under $15,815 but in red by over 2.77%, with volume also down at $2.03 billion.
Much like the price, which could now be in consolidation after surging 45% in the last month, the network fundamentals are also in decline.
However, transaction count is still slightly up along with the miners’ bitcoin selling, which is a good thing. Interestingly, miners see increasingly healthy profit margins thanks to the recent rally.
Alongside the price rise, more mining operators launched, and more resources were dedicated to mine BTC that pushed the network hash rate to a new all-time high in October.
As we reported, in recent weeks, the end of the wet season in China pushed up electricity costs. “With mining hash rate and difficulty at all-time highs and electricity costs rising, miners saw their input costs rise, which compressed mining margins eventually leading to the most recent hash rate decline,” noted TradeBlock.
But now again, at lower difficulties, miners are estimated to be back at healthier margins, especially as the market price of bitcoin continues to push higher.
Although the market seems to have calmed down, for now, it is not clear if a big pullback as expected will come. As we saw with the S&P 500, when QE was first introduced this year, the equity market traded at multiples to its new highs.
Moreover, the aggregate futures open interest (OI) has topped the $6 billion mark. Even on OKEx, OI is creeping through the $1.1 billion mark despite the unresolved withdrawal issues. However, it is worth noting that the Bitcoin mining pool of OKEX has lost almost all of its hash rate, which previously accounted for around 5%, as a result of the withdrawal issues.
“It is this herd like behaviour that also causes over crowded trades and ultimately leads to assets trading at sky high multiples,” noted Denis Vinokourov of Bequant.