• 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. 

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. 

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


Recommended Content

Editors’ Picks

Is Altcoin Season here as Bitcoin reaches a new all-time high?

Is Altcoin Season here as Bitcoin reaches a new all-time high?

Bitcoin reaches a new all-time high of $98,384 on Thursday, with altcoins following the suit. Reports highlight that the recent surge in altcoins was fueled by the victory of crypto-friendly candidate Donal Trump in the US presidential election.

More Altcoin News
Shanghai court confirms legal recognition of crypto ownership

Shanghai court confirms legal recognition of crypto ownership

A Shanghai court has confirmed that owning digital assets, including Bitcoin, is legal under Chinese law. Judge Sun Jie of the Shanghai Songjiang People’s Court shared this opinion through the WeChat account of the Shanghai High People’s Court.

More Cryptocurrencies News
BTC hits an all-time high above $97,850, inches away from the $100K mark

BTC hits an all-time high above $97,850, inches away from the $100K mark

Bitcoin hit a new all-time high of $97,852 on Thursday, and the technical outlook suggests a possible continuation of the rally to $100,000. BTC futures have surged past the $100,000 price mark on Deribit, and Lookonchain data shows whales are accumulating.

More Bitcoin News
Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange

Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange

Shiba Inu trades slightly higher, around $0.000024, on Thursday after declining more than 5% the previous week. SHIB’s on-chain metrics project a bullish outlook as holders accumulate recent dips, and dormant wallets are on the move, all pointing to a recovery in the cards.

More Shiba Inu News
Bitcoin: New high of $100K or correction to $78K?

Bitcoin: New high of $100K or correction to $78K?

Bitcoin surged to a new all-time high of $93,265 in the first half of the week, followed by a slight decline in the latter half. Reports highlight that Bitcoin’s current level is still not overvalued and could target levels above $100,000 in the coming weeks.

Read full analysis
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

BTC

ETH

XRP