- Exchange inflow declined significantly despite BTC’s high prices.
- Miner revenue fell as hashrate increased.
Bitcoin [BTC] has observed quite a rally over the last few weeks, with prices pushing past the $30,000 level. However, the press time’s exchange inflow data suggested that optimistic traders should be wary in the coming weeks.
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The state of inflows
According to Glassnode, Bitcoin’s exchange inflows amounted to $2.3 billion at the time of writing. This observation suggested a widespread contraction in the industry.
Notably, the exchange deposit activity had declined compared to the 2021 bull market, which saw a peak inflow of $12.2B.
The low exchange inflows could negatively impact Bitcoin by reducing liquidity and trading activity. With decreased deposit volumes, there may be limited buying pressure and potential price stagnation.
Lower market participation and decreased activity might lead to decreased price volatility and potentially hinder short-term price growth.
Hash it out
Another factor that could impact Bitcoin negatively would be the selling pressure on miners. Glassnode’s data indicated that Bitcoin’s Hash Rate continued its aggressive expansion and reached an all-time high value of 395 EH/s.
A high hashrate can have negative impacts on Bitcoin miners. It leads to intensified competition among miners, reducing their chances of successfully mining a block and earning rewards. This increased competition also results in lower individual profitability, as mining rewards are shared among a larger number of participants.
Miners face higher operational costs due to the energy consumption associated with maintaining a high hashrate.
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Author: Himalay Patel
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