Bitcoin, Ethereum Under Pressure, Dogecoin Gains: Stressed Miners Are Selling BTC, But Who's Buying?

Zinger Key Points
  • Bitcoin, Ethereum teeter near key levels, Dogecoin spikes
  • Miner distress leading to Bitcoin unloading - Glassnode
  • Crypto market cap could slip to $700-$730 level - trader Justin Bennett

Bitcoin and Ethereum were under pressure even as they traded above key levels of $20,000 and $1,000, respectively, on Wednesday evening, with the global cryptocurrency market cap falling 1% intraday to $898.1 billion at press time.

Price Performance Of Major Coins
Coin 24-hour 7-day Price
Bitcoin BTC/USD -0.95% 0.7% $20,098.58
Ethereum ETH/USD -3.9% 4.6% $1,100
Dogecoin DOGE/USD 5% 12.4% $0.07
Top 24-Hour Gainers (Data via CoinMarketCap)
Cryptocurrency 24-Hour % Change (+/-) Price
TerraClassicUSD (USTC) +92% $0.08
0x (ZRX) +9.9% $0.35
Stacks (STX) +6.7% ​​$0.44

See Also: Best Crypto Debit Cards

Why It Matters: Bitcoin slipped below the $20,000 mark on Tuesday, touching a low of $19,937.79 over 24 hours, while Ethereum teetered around the $1,000 mark in the same time frame but managed to hold on to the level.

Cryptocurrency markets were under pressure after news emerged that a court in the British Virgin Islands had ordered the liquidation of the Zhu Su-led Three Arrows Capital (3AC) hedge fund.

Risk assets like stocks also remained soft amid “limited optimism” from earnings data supplied by retailers, according to Edward Moya, a senior market analyst from OANDA.

The analyst noted that investors removed $10 billion out of equity funds last week alone and it seems unlikely the sentiment on the U.S. Federal Reserve delivering a “soft landing” will improve drastically.

Moya also said, “If Bitcoin breaks below the recent low of around $17,500, there isn't much support until the $14,500 level.”

On Wednesday, Fed Chair Jerome Powell said the central bank won’t let the economy slip into a “higher inflation regime,” reported Reuters. 

“The clock is kind of running on how long will you remain in a low-inflation regime ... The risk is that because of the multiplicity of shocks you start to transition into a higher inflation regime, and our job is to literally prevent that from happening and we will prevent that from happening,” said the central banker.

Cryptocurrency trader Justin Bennett said the total cryptocurrency market cap is likely headed to the $700-$730 billion level, which is a downside of another nearly 19%-22% from current levels.

“We could see a more significant relief rally from there, but it all depends on what's happening with inflation, the Fed, etc,” said Bennett in a recent tweet. 

On-chain analytics firm Glassnode said while small Bitcoin holders or Shrimps, holding less than 1 BTC, and Whales with more than 1,000 BTC holdings have been accumulating, miners have been distributing.

Shrimps have been adding 36,750 BTC a month, which is 0.2% of the circulating supply and 1.36x of monthly issuance. Whales, on the other hand, have been acquiring 140,000 BTC a month directly from exchanges. They account for 45.6% of Bitcoin supply, said Glassnode in a Twitter thread.

“Miners, who have been under immense income stress of late are in distribution mode," said Glassnode.

With the exclusion of Patoshi (an early Bitcoin miner believed by some to be BTC founder Satoshi Nakamoto) and some unknowns, miners hold 65,200 BTC in aggregate and are distributing 3,000-4,000 BTC a month, noted Glassnode.

Miner stress could lead to more unloading going forward, said OANDA’s Moya. “There is a big risk that we could see miners be forced to unload some of their holdings as they’ve overcommitted with GPUs. The big transition to a proof-of-stake (POS) for Ethereum is a game-changer that could hurt miners who financed a lot of hardware.”

Meanwhile, With more than a 12% weekly rise in price, Dogecoin appears to be an exception to the cryptocurrency downturn. The memecoin has been experiencing a 32% increase in its network activity, according to market intelligence platform Santiment.

Read Next: How Bitcoin Crash Could Hurt Kim Jong-Un's Weapons Tests

Photo by Jin Odin on Shutterstock 

Posted In: BitcoindogecoinEthereumCryptocurrencyNewsTop StoriesMarketsMoversTrading Ideas

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