New BTC Miner Surrender? 5 things to know in Bitcoin this week

Bitcoin (BTC) is preparing to exit a dismal November just above $16,000 – what could be on the menu for the BTC price this week?

In an era of what analyst Willy Woo has called “unparalleled deleveraging,” Bitcoin is far from out of the woods after losing over 20% this month.

The impact of the FTX implosion remains unknown, and warning signs continue to pour in even after the first wave of crypto business failures.

This week in particular, eyes are on miners, who are seeing their profits squeezed by falling spot prices and rising hash rates.

Upheaval is in the air, and should another “capitulation” among miners occur, the entire ecosystem could be in for a further shock.

As “max pain” looms for the average hodler, Cointelegraph takes a look at some of the main factors influencing BTC/USD in the near term.

Bitcoin Miners Due To ‘Capitulate’ — Analyst

Like others, Bitcoin miners see a big squeeze when it comes to selling their accumulated BTC at a profit.

It remains to be seen exactly how much financial pain the average miner is in, but a classic calculation is preparing to call “capitulation” again.

Just months after the last such period, Hash Ribbons warns that conditions are once again becoming unsustainable.

Hash Ribbons uses two hash-rate moving averages to draw conclusions about miners’ participation in the Bitcoin network. Crossings of the trend lines indicate capitulation and recovery phases.

For Kripto Mevismi, a contributor to the chain analysis platform CryptoQuant, the time is drawing near for the former to re-emerge.

“So right now bitcoin difficulty is very high for miners, so that means; costs are going to be higher and doing business in this kind of environment is going to be harder,” he wrote in a blog post.

“That is why miners are not working at full capacity. If they have efficient, new generation mining machines, they put them to work, but that’s all. Inflation is high and people are feeling the effects of the cost of living, the bitcoin price is dropping, mining costs and difficulty are getting higher. Tough environment for miners.”

Bitcoin Hash Ribbons Chart. Source: LookIntoBitcoin

Kripto Mevismi added that a significant change in mining difficulty could help the situation.

Estimates from BTC.com for the next adjustment on December 6 put the difficulty at 6.4% at the time of writing. Should that come true, it would be the biggest drop since July 2021.

BTC.com and others similarly estimate that the hash rate is now falling from record levels as miners wind down operations.

Basic overview of Bitcoin network (screenshot). Source: BTC.com

BTC/USD sees volatility towards monthly close

BTC/USD managed to stave off significant weekly losses at the last candle close on November 27.

At around $16,400, the weekly close was a whisker higher than last week, with the pair still at two-year lows, data from Cointelegraph Markets Pro and TradingView show.

BTC/USD 1-week candlestick chart (bitstamp). Source: TradingView

With a lack of volatility characterizing intraday price action, traders and analysts remain cautious about the next step.

“It’s a long holiday weekend, so expect things to get interesting as we move towards the weekly and monthly close,” chain analysis resource Material Indicators wrote in part of a chirping last week.

ONE subsequent posts reiterated that the November 30 close is likely to trigger fresh volatility, with BTC/USD currently down 21.25% from the start of the month.

This makes November 2022 Bitcoin’s worst November since the previous bear market year of 2018, Coinglass data confirms.

BTC/USD monthly return chart (screenshot). Source: Coinglass

On shorter time frames, popular trader Crypto Tony meanwhile highlighted $16,000 as a key zone to reverse for higher levels to enter next while keeping an eye on the long term trend.

BTC/USD Annotated Chart. Source: Crypto Tony/Twitter

“Lower highs along with consolidation below a major resistance zone. If you want to get in safely, wait for a turning point,” he in summary in the weekend.

BTC/USD Annotated Chart. Source: Crypto Tony/Twitter

As Cointelegraph reported extensively, Bitcoin’s next bear market bottom is currently the talking point, and certain targets have become more popular than others.

A vocal commentator calling for further downside, Il Capo of Crypto, thus reiterated his opinion that $12,000 could be next for BTC/USD.

Emphasis relationship between perpetual futures trading volume and spot price, he warned that the current market structure did not support further gains.

“12000-14000 is likely. 40-50% decline for altcoins,” he stressed.

Beneath the Bitcoin sea, hodlers gather

Big or small, the population of the Bitcoin ecosystem is “aggressively” increasing their BTC exposure this month.

As a positive sign of a future supply crunch – where demand comes up against a larger portion of illiquid supply – accumulation appears to be gathering pace.

According to the chain analysis firm Glassnode, it is retail investors who are most responsible for the current trend.

The smaller investors, referred to as “crabs” and “shrimps” depending on their wallet balance, are increasing in number.

“Bitcoin Shrimps (< 1$BTC) have added $96.2kBTC to their holdings since the FTX collapse, an all-time high balance increase. This group now has over $1.21M BTC, equivalent to 6.3% of the circulating supply," Glassnode showed in a Twitter thread about the phenomenon.

Bitcoin shrimp net position change chart. Source: Glassnode/Twitter

Another post noted:

“Crabs (up to 10 $BTC) have also seen an aggressive balance increase of 191.6k $BTC in the last 30 days. This is a compelling all-time high, eclipsing the July 2022 peak of 126k $BTC/month.”

Bitcoin “crab” net position change chart. Source: Glassnode/Twitter

As Cointelegraph reported, part of the increase in smaller wallet numbers may be due to the exchange of users withdrawing money to private storage.

Woo Flags Incoming “Max Pain”

For Willy Woo, the analyst behind the popular statistics resource Woobull, on-chain calculations point to Bitcoin’s next macro bottom being imminent.

By highlighting three of them this weekend, Woo showed that Bitcoin is essentially behaving exactly as it did in the pit of previous bear markets.

For example, the portion of BTC supply held at an unrealized loss approaches macro lows, a phenomenon covered by the “Max Pain” model.

“Bitcoin Bottom Approaching Under Max Pain Model. Historically, BTC price macro cycle bottoms when 58%-61% of coins are underwater (orange). Green shading adjusts for the coins locked in the GBTC Trust,” Woo explained next to a diagram.

Bitcoin Max Pain Annotated Chart. Source: Willy Woo/Twitter

Continuing, he noted that the BTC/USD MVRV ratio value is also targeting a “buy” zone, which has historically provided investors with maximum profit potential.

MVRV is Bitcoin’s market value divided by realized cap – the aggregate price at which each Bitcoin last moved. The resulting number has provided buy and sell zones corresponding to price extremes.

“The MVRV ratio is deep in the value zone,” Woo commented tired.

“Under this signal we were already at the bottom (1) until the latest FTX White Swan debacle brought us back to a buy zone (2).”

Bitcoin MVRV Annotated Chart. Source: Willy Woo/Twitter

Woo’s third chart, Cumulative Value Days Destroyed (CVDD), was recently covered by Cointelegraph.

“Use these charts at your own discretion, we are in an unprecedented time of bearishness,” he added, cautioning that “Past cycles do not necessarily reflect future ones.”

Macro sentiment shaken by protests in China

Some important US economic data is coming this week, but crypto analysts are more focused on China.

With an already fragile status quo hanging on to inflationary trends, unrest in the world’s factories could disrupt market performance, some warn.

China is in the grip of a wave of protests against the government’s policies against COVID-19, with several cities defying lockdowns to demand an end to “zero COVID”.

With this in mind, risk assets can be in for a rough ride if the situation gets out of control.

“The decisive area for Bitcoin could not be broken, so we are still consolidating within this area. On support now,” Michaël van de Poppe, founder and CEO of trading firm Eight, explained.

“If this is lost, I expect further lows to be seen in the markets, likely depending on China and FTX contagion this week.”

Even mainstream media warned of potential fallout on the day, with John Toro, head of trading at the Exchange Independent Reserve, telling Bloomberg that “increased contagion risk is being profiled into the cryptocurrency complex.”

Asian stock markets were modestly down on the day, with Hong Kong’s Hang Seng and Shanghai Composite Index down 1.6% and 0.75% respectively at time of writing.

Hang Seng Index 1-day candlestick chart. Source: TradingView

Bonus: Bitcoin bottoms in crude oil

On a related macro note, Bitcoin is now in line to “outperform” the US dollar, a prominent analyst has said.

Related: Bitcoin May Need $1B More On-Chain Losses Before New BTC Price Bottom

In WTI crude oil terms, BTC price action is already at a macro low – and the story calls for a resurgence, which includes a significant strengthening trend against the USD.

“We are finally at the bottom of the channel,” TechDev confirmed in the weekend.

“Bitcoin crude oil (energy) purchasing power peaked in April 2021. Now it looks set for another leg of outperformance (and increase in USD value).”

BTC/WTI Annotated Chart. Source: TechDev/Twitter

An accompanying chart drew specific parallels to Bitcoin’s performance at the pit of the last bear market in late 2018.

As Cointelegraph reported, meanwhile, TechDev is far from the only voice calling for upside to characterize BTC price action heading into the new year.

The views, thoughts and opinions expressed herein are those of the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.