After the cooling of the US May CPI and unchanged interest rates, the three major US stock indices continued to reach new highs, but the cryptocurrency market failed to follow suit. QCP Capital stated that they believe this is because Bitcoin miners are “surrendering” after experiencing the halving, thus limiting the price increase.
This week, after the US announced the cooling of the May CPI and unchanged interest rates, the three major US stock indices reached new highs again, but the cryptocurrency market fell into a slump. Bitcoin and Ether briefly surged to $70,000 and $3,657 respectively on the 12th before falling back to $67,000 and $3,500.
This raises the question of why the performance of the two capital markets is so different. What is the problem? QCP Capital: Bitcoin miners surrender to limit BTC rise.
In response, digital asset trading company QCP Capital stated that they believe this is because Bitcoin miners are surrendering after the halving, directly limiting the price increase.
Bitcoin miners mainly rely on two sources of income: mining rewards and transaction fees, which must exceed mining costs to be profitable. Therefore, miners need to consider the following points to avoid exiting the mining industry:
Increase in transaction fee income
Rise in Bitcoin price
Decrease in mining costs
The completion of the fourth Bitcoin halving last month reduced the block reward for miners from 6.25 BTC to 3.125 BTC. While the Bitcoin Rune protocol once allowed miners to earn substantial transaction fees, the rapid decline of this protocol led to a sharp decrease in transaction fee income, causing more unprofitable miners to exit and surrender. QCP Capital believes that this situation limits the rise in Bitcoin prices.
As for how long this will affect Bitcoin prices? Some analysts believe that as unprofitable miners exit mining, Bitcoin’s mining costs will decrease, and currently operational miners may not be eager to sell their Bitcoin to fund operations, which to some extent may alleviate selling pressure in the market in the future, making the short-term downside for Bitcoin seem limited.
QCP Capital stated that the crypto market will see a calm summer, with lower trading volumes and no clear catalysts to drive the market.
Kaiko warns: Sudden decrease in transaction fee income may lead to mining companies selling off
In mid-May, cryptocurrency research company Kaiko also mentioned in its weekly report that trading activity usually slows down in the summer months, and liquidity also dries up.
Additionally, the institution pointed out that Bitcoin mining companies typically consider the Bitcoin they hold as liquid assets on their balance sheets so they can sell the Bitcoin they hold to pay operating expenses. The report warned that with the decline in miner transaction fee income, the selling pressure on miners will increase.
According to Kaiko’s data, the total value of Bitcoin held by two major publicly listed mining companies in the US exceeds $1.6 billion. Marathon Digital holds 17,631 BTC, worth slightly over $1.1 billion, while Riot Platforms holds 8,872 BTC, worth over $500 million.
Another cryptocurrency research institution, 10x Research, issued a warning in its April report about Bitcoin’s post-halving trend. Its analysts predicted that miners may liquidate $5 billion worth of BTC after the halving, a sell-off that could last 4 to 6 months, leading to Bitcoin consolidating in the coming months.
