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Miners analysis

Miners are in a difficult situation, with a cost structure at the limit and the sales pressure has increased by 400% as shown in the following Tradingview graph:

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This implies two things: there will be miners who are going to stop mining, and there will be miners who will have to sell part of their reserves if they want to stay active.

Don’t be wrong, the network is not compromised, the Hash Rate is still at all-time highs. There is more computing power than ever guaranteeing the integrity of the Blockchain.

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The impact may come rather from the forced sale of Bitcoins and a concentration in mining (less decentralized). But in economic theory, it is often said that prices can fall until they equal production costs, where they find a resistance that adjusts the supply (less is produced) until creating the necessary shortage so that higher demand makes the price grow again in search for a new point of balance between supply and demand. We will see how this theory applies here.

Holders analysis

Let’s see now how are the holders positions. If we take a bit of perspective and we analyze the “Profitable days” (with the current price, depending on the day of purchase of BTC, in green the holders that would be positive and in red those that would be negative), we see clearly that we have a bad time for holders, but still far from the minimum positions of March 2020 where BTC was at $5.3k.

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This means that the number of wallets in losses has exceeded 50% for the first time in a long time.

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As we see in this chart, this happened only 5 times (the five bear markets) and it didn’t take long to recover from here.

This is very relevant information for me, especially because it seems to me that in a situation like the current one, with an 80% drop in the market, the fact that there are still 50% of the holders in the green means that there is much more resilience than what would be expected.

I would love to compare this metric with stock holders of facebook, Twitter, … but I haven’t found the data (if someone has it please share it with me, if it exists).

In January 2019 the number of holders in red touched ground at 55%, and in 2016 it touched 62%.

Another significant piece of data is the number of wallets (it is not equivalent to the number of users because a person or institution can have N wallets, but there is undoubtedly a correlation between wallets and users). This 51% of wallets in losses is equivalent to 24.6 Million addresses, out of a total of 47.9 Million. I find this interesting fact. Compare it to this:

The amount of monthly active users:

  • Facebook: 2.9 billion
  • YouTube: 2.2 billion
  • WhatsApp: 2 billion
  • WeChat: 1.2 billion
  • Instagram: 1.2 billion
  • Tiktok: 732 million
  • Telegram: 700 million
  • Snapchat: 528 million
  • Pinterest: 459 million
  • Reddit: 430 million
  • Twitter: 396 million

Imagine how much it can grow if people begin to understand the real utility of Bitcoin beyond short-term speculation as a global, immutable, confiscation-resistant, reliable, and deflationary store of value.

And now let me show you one last graph, that of transactions that are carried out on the Bitcoin network:

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So, with all this, do you think we are facing a demand problem? offer? In the long run, where do you think the new equilibrium point between supply and demand will occur?

If we could draw a map with all the data available and put on one of those “You are Here” signs, we may find out something like this 😉

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Yours in crypto