Bitcoin (BTC) mining difficulty reached a new all-time high of 53.91 trillion units after the latest difficulty adjustment on July 12. This is a measure of how hard it is to mine a Bitcoin block.

The blockchain adjusts the difficulty every two weeks to maintain a 10-minute processing time. When the network’s processing power increases, it adjusts to make mining more challenging, thereby reducing profitability for individual miners.

The latest adjustment will increase pressure on miners who have been selling their mined BTC since June. Some analysts suspect that the lack of miner accumulation may have limited the uptrend of BTC prices.

With the latest difficulty adjustment, profitability for small and medium-sized miners may fall into negative territory, forcing them to temporarily shut down some of their ASIC miners.

The potential capitulation of weaker miners could eventually enable larger miners to accumulate Bitcoin, which could alleviate mining selling pressure.

Are miners close to capitulation?

The Hash Ribbon indicator, created by independent analyst Charles Edwards, tracks the 30-day and 60-day moving averages (MA) of the network hash rate. When the 30-day MA falls below the 60-day MA, it is a signal that miners may be capitulating, meaning that unprofitable miners are leaving.

The two lines are slightly close to crossing, and the increase in difficulty could eventually provide a catalyst for capitulation by weaker miners.

The outflow of weaker miners will result in greater rewards for more efficient miners, potentially enabling them to save some of their output rather than sell it.

Can Bitcoin Go Higher After Miner Selling Stops?

Miners have been seen unloading record amounts of BTC to exchanges recently. According to a report from K33 Research, listed miners sold 100% or more of their production in May.

Also in June and July, the 30-day cumulative transfer volume of BTC from miner wallets to exchanges surged to a six-year peak, suggesting that miners may continue to offload Bitcoin at an alarming rate.

Miner single-hop supply from Coin Metrics, which represents the total amount held in wallets that receive coins from mining pools, also fell to a one-year low. It shows that miners are uploading more coins than they are producing.

Related: Bitcoin’s Pre-Halving Rally Could Start Soon — Here’s Why

While miners have resorted to selling, supply allocation data from on-chain analytics firm Santiment shows that Bitcoin whales are doing the exact opposite.

Since June 17, the most prolific BTC investors, often referred to as whales and sharks, whose holdings are between $10 and $10,000, have accumulated $2.15 billion.

On top of that, Bitcoin held on exchanges has also fallen below 2017 levels, suggesting that investors are moving BTC off exchanges and increasing its illiquid supply.

While Bitcoin accumulation among whales has previously pushed up the price of BTC, this time around, it remains suppressed in a narrow range between $29,500 and $31,500, likely due in part to miner selling pressure.

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Author: Deepchain DCNews

Compiled by: Sister Shen

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