- Bitcoin price is at risk of a massive decline from short positions taken by traders, according to a crypto expert.
- Bitcoin Stock-to-Flow model creator Plan B weighs in on the FUD and corrects the analyst, says BTC halving is not yet priced in.
- Plan B argues against the “death spiral” narrative for BTC miners, throws weight behind the largest asset by market capitalization.
Bitcoin network’s fourth halving is expected to occur in March 2024, this is when block rewards will be slashed in half from 6.25 BTC to 3.125 BTC. Analysts consider the current scenario, the macroeconomic outlook, US regulators’ sale of BTC and the regulatory crackdown as the “death spiral” of Bitcoin miner profitability and BTC price.
The creator of Bitcoin’s Stock-to-Flow model refuted the claims and argued that the fourth halving is not priced in yet.
Also read: Layer 1 coins Ethereum, Cardano and DOT make massive moves, riding on alt season gains?
What is the Bitcoin “death spiral” narrative for miners
Crypto analysts and developers behind the Twitter handle CoinClubQuincy presented a “death spiral” narrative for Bitcoin, miner profitability and BTC price in a recent tweet. Experts based their thesis on high hash rate stressing the energy grid and negatively influencing miner profitability.
In the long term, according to the bearish thesis, large scale miners are likely to drop off the network leaving block times to grow longer, and profitability would take another hit. Once a large percentage of miners have dropped off the BTC network, it would be vulnerable to attacks.
At this point, traders could increase the selling pressure on the asset, opening massive short positions to push BTC price lower for increasing their profitability, alongside sale of BTC by governments and regulators. The team is likely referring to the time when a US regulator sold BTC seized during the FBI’s crackdown on the Silk Road.
This is the last time I’ll say it #BTC will create the worst economic disaster in the history of mankind
— Your Bro Quincy (@CoinClubQuincy) April 2, 2023
And yes I’m making this post to reference later when everyone dumbfounded on how the network could fail:
high #BTC prices -> encourages more miners -> high hash rate ->…
Plan B dispels the bearish thesis as FUD, what does this mean for BTC
Plan B, popularly known as the creator of Bitcoin’s Stock-to-Flow model argues that the thesis is flawed. Miner “death spiral” is an unlikely scenario and argues that this is evidence that Bitcoin’s fourth halving is not priced in yet.
Proof that 2024 halving is not priced in. After 3 halvings, there are still people who think there will be a miner death spiral. Hilarious.. and profitable inside info https://t.co/dXwE3v4ycw
— PlanB (@100trillionUSD) April 3, 2023
Each Bitcoin halving has pushed the asset’s price higher, to its new all-time high. While traders would expect the “halving narrative” to be priced in by now, bearish theses that call the death spiral or the end of BTC prove that it isn’t.
Bitcoin holders have noticed a slight retracement in BTC’s dominance and capital rotation into alternative cryptocurrencies. However, its important to note that China’s ban on Bitcoin resulted in several miners shutting down their mining operations and the hashrate simply migrated out West, with an adjustment period where mining profitability declined.
The Bitcoin network could have suffered a “death spiral” during China’s ban on Bitcoin, however the black swan event didn’t occur, fueling a bullish sentiment among holders and supporting the thesis of Bitcoin’s resilience against such events.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Celebrity meme coins controversy continues amid Pump.fun revenue dominance
Pump.fun outperformed the Ethereum blockchain on Tuesday after raking in $1.99 million. Following this achievement, a meme coin based on actress Sydney Sweeney was the subject of controversy after its developers dumped their bags on investors.
PEPE's on-chain metrics indicate potential rally after weeks of silence
PEPE has struggled to see any significant price move after reaching an all-time high in May. Increased adoption rate and low MVRV ratio indicate a bullish run may be on the horizon. A single PEPE outflow from Binance worth $14.7 million gives credence to signs of bullish expectation.
Ethereum has failed to overcome key resistance despite bullish sentiment surrounding ETH ETF
Ethereum (ETH) is down more than 1.4% on Tuesday following another ETH sale from the Ethereum Foundation. Meanwhile, crypto exchange Gemini's recent report reveals that ETH ETF could see about $5 billion in net inflows within six months of launch.
Crypto community blasts Polkadot following report of treasury spending
Polkadot reports $87 million of treasury spending during H1. Crypto community members expressed harsh feelings toward the DOT team's high spending. DOT is up more than 2% in the past 24 hours but risks correction following the report.
Bitcoin: BTC price correction could end in July, according to seasonal data
Bitcoin (BTC) price appears poised for a decline this week, influenced by slight outflows in US spot ETFs, selling activity among BTC miners, and a combined transfer of 4,690.28 BTC to centralized exchanges by the US and German governments.