The first indicator analyzed is the Puell Multiple, which is a cyclical oscillator that compares current daily mining revenues to their annual average. In June, the Puell Multiple index reached its lowest level to date at around 0.33, indicating that miners were making just 33% of their average annual revenues. The index has since risen to around 0.63, indicating some degree of stress relief and adjustment to the new “price regime”.
All previous bear cycles have experienced a strong rally from the lows in the case of the multiplier, which is associated with short-term price relief after a final bottom was established during down cycles.
The risk of a collapse in Bitcoin's mining market is beginning to pass?
The Puell Multiple and the production cost model are implied stress models that estimate the prices at which miners' revenues may come under pressure (forcing additional coin sales). The model in the chart below combines the implied revenue stress of the Puella multiplier with the observation of stress from the Difficulty Ribbon Compression Index, or Difficulty Ribbon Compression. At the time of writing this article, the model had just come out of levels where capitulation of miners was statistically likely.
It should be remembered, however, that during all of BTC's previous downtrends, there were several periods when the exit from the risk zone was only temporary. Therefore, we will still have to wait for full confirmation. In Glassnode's opinion, however, the indicator is worth watching over the coming weeks.
Miners are still selling Bitcoins, but half as much as in September.
The last indicator analyzed is the net change value of BTC miners' positions, which allows us to determine the actual distribution and accumulation patterns in the mining industry. The chart below shows the 30-day change in miners' portfolios, and although distribution has slowed, it remains at around 4,500 BTC per month. However, this is a 50% decline from the peak in early September.
However, looking more closely, one can see that the vast majority of current spending is coming from miners associated with the Poolin mining pool. The orange line below shows the 30-day change for all miners, while the blue line is for Poolin, showing that almost all spending is related to this group.
Poolin was until recently one of the largest mining pools in the industry, accounting for more than 15% of the hash rate in early 2020 and 12% in early September. Following the announcement that Poolin was experiencing “liquidity issues”, the estimated hash rate fell, accounting for just 3.7% of the network's hashing capacity today.
Bitcoin is on the lookout for a return of volatility.
Amid the global chaos in traditional markets, Bitcoin prices remain remarkably stable, in a multi-month consolidation between $18-20K. It is extremely rare for BTC prices to remain so stable for long periods of time, suggesting an increased likelihood of volatility on the horizon.
Bitcoin's mining hash rate reached new records this week, pushing up the cost of producing BTC, at a time when miners' revenues have only just recovered from the recent capitulation. Based on numerous models, Glassnode estimates that the average cost of producing BTC is hovering just below current prices, such that any significant drop in prices could turn the implied revenue stress into a sharp and pronounced stress.
This risk could manifest itself as a capitulation of second-tier miners, with some 78,400 BTC still in wallets. It is extremely unlikely that this entire amount will be spent, but it represents the upper limit of potential risk.
Translated and published with permission fromhttps://comparic.pl/bitcoin-czy-ryzyko-kapitulacji-gornikow-btc-juz-minelo/
