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A widely followed crypto analyst says a Bitcoin rally is still far away and expects prices to consolidate in a sideways trend.
Noting that Bitcoin is currently 70% down from its all-time high, analyst Will Clemente tells his 650,000 Twitter followers “everything they need to know about the current state of the Bitcoin market” as he explains the significance of Bitcoin miners‘ behavior:
“Ok, now let’s talk miners. We’ll talk through cyclical dynamics between miners and the marketplace, followed by ways to value BTC using miner dynamics.
Miners are very pro-cyclical forces in the Bitcoin market. They hold their Bitcoin in the bull market and become forced sellers in the bear.”
Clemente then elaborates on the specific moves miners may be taking to secure their operations
“In an event of margin compression, miners may shut off their rigs that are no longer operating at a profitable first, then as last resort sell some of their rigs or even Bitcoin holdings depending on their individual situation and strategy.”
He adds:
“Ultimately, we should expect the miners that do survive this bear market to come back even stronger; (as well as the Bitcoin network) including some likely acquisitions of weaker/less-conservative operations. For now though, the public market has punished mining stocks.”
The analyst concludes his 35 Tweets-counting thread somewhat pessimistic:
“In what appears to be a bottoming range, my base case is sideways consolidation/ranging in the intermediate term with macro headwinds and no clear narrative for the market to rally around at the moment. This thesis is also supported by Q3 being BTC’s worst performing by far.”