Why Bitcoin Investors Need to Understand Miner Sell Pressure - Extreme Difficulty Reduction (-15.95%) Indicates Miner Capitulation

If you’re a trader or investor in Bitcoin and don’t understand that the primary source of sell pressure on the price of Bitcoin comes from Miners, its in your best interest to research Miner Sell Pressure, Difficulty, Halving 2020, and Miner Capitulation.

Today we witnessed the second largest Difficulty reduction (-15.95%) in Bitcoin Network History. In the past, extreme Difficulty reductions signal favorable probabilities for long-term capital deployment.

Yes, many leveraged trader blew out with the recent price decline, but Bitcoin continues to show exhaustion because there are still 54,000 ($540,000,000 when Bitcoin is at $10,000) newly minted Bitcoin released each month to Miners - a significant percentage of which must be sold to fiat in order to fund their electricity expenses. This generates consistent sell pressure on the price of Bitcoin. Extreme Difficulty reductions indicate that inefficient miners were forced to shut down (Miner Capitulation).

These Miners were operating on thin margins and therefore, were forced to sell all of their mining rewards. They were the primary source of Miner Sell Pressure on the network. After shutting off, the Bitcoin they were receiving is allocated to the more efficient, experienced miners with excellent margins who are positioned to accumulate a larger percentage of the newly minted Bitcoin rather than having to sell it - significantly reducing sell pressure and establishing a healthier environment for Bitcoin to advance.

For deeper insights, check out our most recent research report here. We put this research piece together in January with the intention of keeping it internal and solely sharing it with clients we advise, but given the fear in the market, especially for miners, we have elected to share it with the everybody. Everyone in the Bitcoin space should deeply understand this information as it thoroughly explains the Bitcoin Mining Network and how Miners create constant sell pressure on the price of Bitcoin.