Why Bitcoins Price Dropped Under $40k (Miners Controlling Price?)

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Hi guys its sterling specter here, in today’s video I want to talk about the recent drop in prices of both bitcoin and Ethereum. So if you haven’t seen in the news the price of both these coins dropped around 4.5% each about two days ago. Whereas bitcoin used to be above $40000 per coin it has dropped to $39000 a coin, the price drop for Ethereum was from $3000 a coin to around $2900 a coin. now you might be thinking that this isn’t a major drop but it is in regards to the whole crypto space as bitcoin tends to effect every coin on the market. Therefore, this price drop has caused price drops for most coins. Now the reason I’m making this video is because a lot of these recent price drops can be attributed to crypto miners. This is because the mining space has experienced several developments that may have put further pressure in the price on crypto.
So why are miners getting pressured? Well over the past few months we have seen crackdowns on crypto mining from various different countries and even in countries that allow crypto mining there has been crackdowns. For example, even in the USA you now have to register yourself to be a miner, the problem with this is that you have to be approved by the agencies and therefore you can’t start mining or expanding business without there approval. So, these delays are stopping miners from mining at full capacity and therefore they are starting to sell off their saved crypto to ensure that they have enough money to upkeep their facilities. When it comes to GPU mining the pressure of mining is coming from the Ethereum merge which we all know is fast approaching and will be here anytime in the next few months. Now this leads to miners having to sell their crypto at not an ideal price so they are effectivity selling more crypto than they should be just to up keep mining.
Another main factor of the price drop is due to the difficulty on the bitcoin network, this also dropped 1% before the price drop, as we have seen in the past when the difficulty drops the price tends to follow. For example back in July of 2021 when China was cracking down on the mining it caused the difficulty to drop a massive 28%. Then shortly after the price of bitcoin went from $35000 a coin to $30000 a coin which was a massive price drop. There is also news that Iran is starting to crackdown on crypto mining and this could affect the difficulty on the network to where it lowers further.
However since writing this video the price of bitcoin has returned over the 40k mark and is now sitting at 41k and the same goes for Ethereum, I think that the lower price has interested people to start buying up when they saw a price drop. Which begs the question of will it ever stop fluctuating around and start to have a soft price.
In my eyes bitcoin has always been a hedge against inflation, as truer than ever we have seen the inflation rise loads in the past two years due to the US printing so much money. They are basically trying to inflate the money away at this point. However right now many people aren’t using bitcoin as a hedge against inflation they are treating like a stock or equity. This is slowly changing as it seems because new reports have show that many people are taking their bitcoin out of exchanges and holding it in their own wallets. So last week the number of coins held on exchanges dropped by more than 20000 bitcoins which reportedly was the lowest amount held on exchanges since august of 2018, furthermore if we look at the decline of coins held on the exchange this year we have seen a decrease of around 140,000 bitcoins taken off exchanges. If this decline increases it will mean that there are less coins available for sail and this should in theory drive the price of bitcoin up. If we see a major decline of 100,000 in the next month we could be in for a rally of the price. Furthermore, the percentage of inactive bitcoins is increasing and reached a year high of 63.7%, this means that over half of the bitcoins aren’t being moved at all and this is probably due to people starting to hold and wait for the rally in which they can beat out inflation and sell at a high price. I now think that history is starting to repeat itself as back in 2018 everybody was holding and then after around a year and a half there was a massive price rally. This could be the start of a steady price for bitcoin and could have the potential to break out in price.
So that’s my thoughts on the crypto market right now, if you have any thought or question leave a comment below or join the discord in the description below. Also don’t forget to like the video and subscribe to the channel for more crypto mining content.