Written by: CryptoVizArt, UkuriaOC, Glassnode Translated by: Chris, Techub News Summary
At the time of writing, Bitcoin’s hashrate is slightly below its all-time high, and despite a decline in Bitcoin miners’ revenues (usually due to a drop in Bitcoin prices or an increase in mining difficulty), miners’ continued investment suggests they are optimistic about a future recovery in Bitcoin prices and the Bitcoin ecosystem.
Investor interaction with exchanges is decreasing, and the decline in trading volume indicates a weakening interest in investors and trading.
Both Bitcoin and Ethereum ETFs experienced outflows, however, the outflows from the Bitcoin ETF were relatively small, showing that Bitcoin still attracts a lot of investor attention.
miner
Miners are core participants in the Bitcoin ecosystem, responsible for processing and verifying transactions, maintaining network security, and are the only source of new Bitcoin production. Miners provide computing power to discover the next valid block, and the network automatically issues newly issued Bitcoins to miners who successfully mine new blocks.
Since miners do not have full control over the cost of the electricity required to mine (input cost) and the market price of Bitcoin (output cost), this makes mining a very challenging industry.
Despite the challenging and uncertain market environment, Bitcoin miners are still actively investing in new ASIC hardware, driving overall hashrate growth, which currently (at the time of writing) stands at 666.4 EH/s, just 1% below its all-time high.
As the computing power on the network increases, the mining difficulty will automatically increase. The Bitcoin network adjusts the difficulty every two weeks to accommodate the rise and fall of computing power on the network.
The current average mining difficulty is the second highest in Bitcoin history, with about 338,000 Exahashes of computation required to mine a block. This difficulty level highlights the fierce competition in the mining industry.
Since Bitcoin prices hit a record high in March, Bitcoin miners have seen a significant drop in revenue. The main reason for the drop in revenue is a decrease in transaction fees. This is due to lower demand for Bitcoin transfers from users and a decrease in rune and inscription-related transaction fees.
Although the current spot price of Bitcoin exceeds $55,000, miners' block subsidy income is still relatively high, but it is still about 22% lower than the previous highest level. The specific income data is as follows:
Block subsidy revenue: $824 million
Transaction fee income: $20 million
As revenues decline, miners may face greater operational pressure. To assess this, we can measure their resource consumption by calculating what proportion of their mining resources or electricity supply they have used in the past 30 days.
Due to the fierce competition in the mining industry, miners usually need to sell a large part of the mined Bitcoin to cover operating costs. Interestingly, miners have shifted from selling all the mined Bitcoin to now keeping some Bitcoin as reserves.
This change is particularly important because miners are generally pro-cyclical: they tend to sell Bitcoin when the market is falling, and hold Bitcoin when the market is rising. As the hash rate and mining difficulty rise, the cost of producing Bitcoin is also increasing, which may have a negative impact on miners' profitability in the near future.
Settlement volume declines
On-chain settled transaction volume is a reflection of the adoption and health of the network. Currently, filtered and adjusted on-chain transaction volume is approximately $6.2 billion per day.
However, settlement volumes have begun to decline toward annual averages, indicating a clear reduction in network usage and throughput.
Declining willingness to trade
In the current market environment, the decrease in trading volume on centralized exchanges indicates a decrease in investor activity and speculative interest. This downward trend can be seen by comparing short-term (30 days) and long-term (365 days) volume data. This is a negative sign that the market is becoming less active.
Next, we analyze the spot volume of the exchange. We used the 90-day MinMax normalization method, which normalizes the spot volume data to a range of -1 to 1. The normalized value is calculated relative to the maximum and minimum values of the selected period.
From this analysis, we can see that the momentum of spot trading volumes continues to weaken, which is consistent with previous observations. This further supports the view that trading activity has clearly declined over the last quarter.
The CVD indicator shows that the selling pressure in the market has been increasing over the past 90 days, which is consistent with the downward trend in prices, further illustrating the selling pressure in the current market.
Finally, we can assess the price momentum of Bitcoin’s price. Observe that in August, price momentum has seen alternating positive and negative data points. This is in stark contrast to the two indicators mentioned previously, both of which showed clear negative trends over the same time period.
By applying a MinMax transformation to volume, CVD, and price momentum, we can generate a sentiment heatmap showing the range of feature values between 1 and -1. We can interpret these values according to the following framework:
🟢 A value of 1 indicates high risk
🟡 A value of 0 indicates medium risk
🔴 A value of -1 indicates low risk
In the past 90 days of data, all three indicators show that the market is entering a low risk range. The consistency of these spot indicators shows that price momentum is slowly declining, even though Spot Volume Momentum and CVD indicators show that selling volume is decreasing (CVD < 0). This market structure may be sensitive to external factors and may see a price breakout if market conditions change.
ETF
The Ethereum spot ETF followed the launch of the Bitcoin spot ETF in August. These two events marked an important turning point in the digital asset ecosystem, providing a convenient entry point for traditional U.S. markets to gain exposure to cryptocurrencies.
Looking first at the Bitcoin ETF, net outflows (in USD terms) have slowed since August 2024, with weekly outflows currently at $107 million.
Demand for the recently launched Ethereum ETF was relatively muted, with net outflows. This was primarily driven by redemptions from Grayscale’s ETHE product, which were not adequately offset by inflows from other related products.
The total outflow from the Ethereum ETF was $13.1 million on September 5. This highlights the difference in demand between Bitcoin and Ethereum under current market conditions.
To estimate the impact of ETFs on the Bitcoin and Ethereum markets, we compared ETF net outflows and inflows to spot trading volume. This ratio allows us to directly compare the relative influence of ETFs in each market.
As shown in the chart below, the relative influence of ETFs on the Ethereum market is within ±1% of spot volume, while the relative influence of Bitcoin ETFs is within ±8%. This shows that even after normalization, the demand for Bitcoin ETFs is still an order of magnitude higher than that of Ethereum ETFs.
Summarize
Miners are still showing great confidence in the Bitcoin network, with hashrate still near all-time highs despite a sharp drop in revenue. However, since miners tend to be pro-cyclical, selling when the market falls and holding when the market rises, some selling pressure can be expected if the market falls further.
At the same time, investor interaction with exchanges continued to decline, and overall trading volume contracted, indicating a weakening demand from investors and transactions. This was also reflected in the institutional investment sector, with both Bitcoin and Ethereum ETFs experiencing net outflows.