Crypto Market Stays in 'Crab Mode' While Crypto Stocks Underperform Amid Intensified Mining Competition
Summary:
The cryptocurrency market continues to be stuck in a trading range, with conditions that analysts are calling a "crab market." Bitcoin (BTC) shows relative resilience despite the underperformance of the stock market and many publicly-traded crypto firms seeing challenging times with price drops. Specifically, the crypto mining sector has seen drastic share price reductions. Events like Bitcoin halving and increased competition among miners are some contributing factors. Despite these challenges, the Cointelegraph Research team continues to provide in-depth reports and valuable insights into current market trends and conditions.
The cryptocurrency market, particularly Bitcoin (BTC), has been stuck in a trading range of $25k-$30k for a while, in a trend analysts have dubbed a "crab market." A significant macroeconomic or cryptocurrency-specific event might be needed to trigger a market shift. However, this did not take place in September. The price of BTC fell briefly to the lower limit of its trading range, reaching $25,200, but rebounded to $26,900 in the second half of the month, ending with a monthly surge of 3.92%. This defied the routine pattern of September losses, contrasting with the performance of traditional financial markets, as the S&P 500 fell by 5.4% in this timeframe. Nonetheless, Bitcoin's relative steadiness failed to underpin the entire sector. Cryptocurrency stocks experienced a correction more significant than that of the S&P, while altcoins continued their losing streak against Bitcoin. As usual, the Cointelegraph Research Monthly Trends report offers a comprehensive analysis of industry developments—an essential tool especially in bearish market conditions when less established sectors often vanish from headline news. This report can be accessed by Pro subscribers via the Cointelegraph Research Terminal.
Public trading major crypto businesses performed poorly in September, with their stocks underperforming. Share prices fell between 10%-40% in many instances, with the sector averaging a downturn of 22.4%. Crypto mining stocks were particularly hard-hit, with TeraWulf, Marathon Digital and Iris Energy Limited all losing nearly a third of their value. These miners, who had earlier experienced sizable rallies in H1, saw share prices start to decrease in July, effectively wiping out most prior gains. Some of these downturns are specific to the mining sector and are not expected to have a broader impact on crypto.
The sharp decrease in mining stocks can partly be attributed to more stringent mining economy. April of the following year will witness the next Bitcoin halving event, cutting validation rewards by half instantaneously. Despite this, both network hashrate and difficulty continue to reach record levels, causing Bitcoin mining to become increasingly competitive and profit margins to dwindle. In absence of further capital raising, mining companies could face financial strain post-halving unless Bitcoin stages a significant rally.
In September, leading ASIC mining hardware manufacturer Bitmain announced a new Antminer model, set to escalate competition in the coming months. These S21 rigs will have a mining efficiency of 17.5 J/TH, a 20% improvement from its predecessor. Miners who manage to secure capital for an upgrade will be in a position to outperform their competitors when the effects of halving become apparent.
Contributors at Cointelegraph's Research department are some of the brightest minds in the blockchain industry. They synergize academic expertise with practical experience to offer ultra-accurate, insightful content. With a cumulative experience spanning decades in business, engineering, technology, finance, and research, the team has launched a timely Investor Insights Report with its comprehensive skillset. The views shared in the article are solely meant for informational purposes and don't constitute financial advice or recommendations for individual or specific securities or investment products.
Published At
10/20/2023 12:24:00 PM
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