The State of Bitcoin in 2022: From HODlers Confidence to Mining Transformation

2022 has been a rough year for the cryptocurrency investor market in a brutal crypto winter. It all started with the collapse of the algorithmic stablecoin TerraUSD, which caused other major crypto players to fall like dominoes: Three Arrows Capital. Voyager Digital, Celsius Network, FTX, Blockfy.

There is not a single project, protocol or institution that has not felt the infection this year. Bitcoin futures volumes are hovering near multi-year lows due to tight liquidity, large-scale deleveraging and write-downs by many of the sector’s trading and lending bureaus. Even Open Interest took a similar turn after the disastrous fall of FTX. Bitcoin miners have also been hemorrhaging hard.

Despite the huge losses, the accumulation trend is still strong in this bear market.

The scammers remain unaffected

Bitcoin is currently closing in the tight range from $16,000 to $18,000 as the market continues to suffer from persistent macroeconomic uncertainty. This has not stopped investors from hoarding tokens.

According to the latest Glassnode release this year, the intensity of coin repatriation has increased after each market downturn. One of the most notable, in particular, is the period between June and October when coins worth between $18K and $24K were obtained. The report stated:

2022 was a rough year, sending volatility and volumes to multi-year lows as liquidity and speculation dried up. With speculators gone, long-term Bitcoin holder supply has pushed another ATH, and investors seem to be stepping in as the volume of coins increases at each price drop.”

Bitcoin accumulation stages. Source: Glassnode

While institutions are cautious, it is private investors who are accumulating more and more bitcoins. Actually recently data It indicates that approximately 17% of the total circulating supply of Bitcoin is now owned by private investors. According to Glassnode, those holders are those with less than 10 BTC in a portfolio (it’s currently worth $169,000 in today’s prices.) The percentage of bitcoin supply held by retail investors has been on an upward trajectory since 2011.

Mining revenues decline

Bitcoin mining has undergone a drastic change this year after suffering major pressures on revenue. A large portion of Bitcoin’s active hash rate was locked out, which adjusted the difficulty to last fall’s 7.32%.

In recent months, many operators have shut down their ASIC machines while many other miners have gone bankrupt or are on the verge of being demoted. Compute North was the first of its kind to file for bankruptcy in September.

Three months later, another prominent Bitcoin miner – Core Scientific – filed for Chapter 11 bankruptcy protection in Texas. Greenidge has also contacted NYDIG to set up a financial debt restructuring of $74 million, although bankruptcy is still pending.

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