The crypto market is experiencing the second day in a row of a correction with Bitcoin bleeding deep red. This has made some think that buying the dip is currently not worth it.
Bitcoin may have corrected heavily this week, but Bitcoin futures open interest continues to still be high. If we take a look at history, we see that unless the Bitcoin OI becomes negative or neutral, the correction is not over.
According to technical charts, Bitcoin seems to have a daily closing of below the $36,500 level which would be the lowest daily close since late July 2021. Some are predicting that Bitcoin will go down to $33,000 or even lower than that.
During this correction, Bitcoin miners have begun to accumulate the coin. Miners managed to gather over 6,000 BTC over the previous two weeks as the price of Bitcoin experienced a correction from $45,000 to $38,000.
This means we are approaching the miner production cost of $34,000 and if the price will continue to further correct, Bitcoin miners could capitulate and start selling.
Venturefounder, a crypto analyst, wrote a week ago, when Bitcoin was still trading at $42,000:
“The worst dumps #Bitcoin ever had were due to miners capitulation (Dec 2018, Mar 2020), when Bitcoin fell below production costs, it is at risk for miner capitulation BTC was at risk for miner capitulation at $30k in May. The current production cost is $34k, 20% below current price.”
This correction that the crypto market is experiencing now is a result of the broader sell-off in the US equity market.
Will Clemente, market analyst, stated:
“This week Bitcoin’s correlation to the Nasdaq reached an all-time high. With no catalyst to cause idiosyncratic flows to BTC, for the time being, it is just following risk-off behavior from equities with a high beta.”