Cryptoverse: Shrimp and whales keep bitcoin afloat
The shrimp of the crypto-world has joined the whales in a glorious last battle to banish the gloomy bitcoin winter.
These two contrasting groups are both HODLers – investors in bitcoin as a long-term proposition that refuses to sell their holdings – and they are determined to drive the bears back, despite the fact that their portfolios are deeply in the red.
Shrimp, investors who have less than 1 bitcoin, add up to the balance at a rate of 60,460 bitcoin per month, the most aggressive price in history, according to an analysis by computer company Glassnode.
Whales, those with more than 1,000 bitcoin, added 140,000 coins per month, the highest rate since January 2021.
“The market is approaching a HODLer-led regime,” Glassnode said in a note, referring to the cohort whose name appeared years ago from a trader who misspelled “hold” on an online forum.
After bitcoin’s worst month of 11 years in June, the decline appears to have slowed as transaction demand appeared to move sideways, according to Glassnode, indicating a stagnation of new players and a likely retention of a base load of users. i.e. HODLere.
Bitcoin has hovered around $ 19,000 to $ 21,000 in the last four weeks, less than a third of the $ 69,000 peak level in 2021.
“There’s a saying in crypto markets – diamond hands. You have not really lost money, if you have not pulled out. There may be a day it can come up again,” said Neo, the online alias of a 26-year-old graphic designer at a fintech company in Bangalore.
When the crypto bear market enters its eighth month, his crypto portfolio was down 70 percent – even though he said it was money he was “okay with losing”. He has no plans to sell, and is holding out for a possible upswing in the years to come.
Like Neo, most HODLs portfolios are under water, but many refuse bail.
About 55 percent of U.S.-based crypto-retail investors held their investments in response to recent sales, while about 16 percent of investors globally increased their crypto exposure in June, according to a survey of private investors from eToro.
“Crypto is an asset class disproportionately held by younger investors who are more risk tolerant since, for example, they have 30 more years to earn it all back,” said Ben Laidler, eToro’s global marketing strategist.
Miners’ pain
Another class of solid crypto-HODLers – bitcoin miners – are increasingly under pressure as they face the double cramp with crater prices and high electricity costs. The cost of extracting a bitcoin is higher than the price of digital assets for some miners, said Citi analyst Joseph Ayoub.
The unfavorable environment for many of these miners, who have loans against their mining systems, has forced them to withdraw from storage.
Core Scientific sold 7,202 bitcoins last month to pay for the mining rigs and fund operations, bringing the total holdings down to 1,959 bitcoins.
While Marathon Digital Holdings said it had not sold any bitcoin since October 2020, the company said it could sell part of its monthly production to cover the costs.
Valkyrie bitcoin miners ETF fell 65 percent last quarter, surpassing bitcoin’s fall of 56 percent.
Lessons from the crypto winter in 2018 were that the miners who survived were the ones who continued to produce even though they were under water. That approach is unlikely to work this time around, said Chris Bae, CEO of Enhanced Digital Group, which designs security strategies for crypto miners.
For the bosses of the mining companies, Bae added, the focus now is on “the need to think through the next crypto winter and have that game plan before it happens instead of during it.”
