Several have been wondering which category represents the vast majority of crypto bears lately as costs keep piling. People who got into crypto over the previous year have probably fled the scene together with tails between their thighs and burnt palms. That leaves extended term hodlers, institutional investors, and Chinese crypto miners.
Chinese Miners Appreciating the Short Game
A report at a neighborhood media novel aligned with Bitmain indicates it might be the latter group which have been shorting Bitcoin in good numbers. According to a translation of this narrative, several quotations were taken out of Chinese miners describing their justification;
“Everyone is short-seller, we do this for self-defense but that will lead to a further decline in cryptocurrency price… Without short selling, we will be eliminated ultimately, but if everybody keeps doing this, we will finally die together, which is quite heroic,” said a Chinese miner named Jin Xin.
At a bear market using a downward trend That’s becoming jaded from the week it makes sense to hedge shorting cryptocurrencies;
Comparable to stocks, the miners could lock in a price for their coins rather than facing more uncertainty farther down the line when costs are most likely to be much lower. Hedging is now a vital skill in living a bear market whereas four decades back, if there were fewer Bitcoins and mining difficulty has been considerably lower, hodling could have sufficed.
Bitcoin mining has gone through many phases through time, by a garage action for fans on gambling channels, to mega factories, and to a fiscal model. The key now is that when the price drops, then miners earn a gain, but that gain is negated from the lower value of the coin that they have. As pointed out by Trustnodes, if cost rises, they then make a reduction by short sale, but that reduction is annulled from the greater value of the currently movable coin that they hold.
This is a somewhat selfish and damaging approach to this crypto ethos that might well lead to bankruptcy for several Chinese miners. Smarter ones are very likely to be hodling while the storm moves and awaiting for a time which they can sell at a higher cost instead of attempting to receive immediate gains by destroying the item.
This season increasing hashrates have attained a stage of unsustainability, a tipping point beyond which it wouldn’t longer be profitable to keep mining. Within the last month difficulty and hashrate have fell since miners begin to pull their heavy responsibility mining channels out, leaving a difference to your smaller outfits.
Some miners have begun buying secondhand GPUs again as another approach, the covetous are shorting, and people most likely to endure have become hibernation with their stash to get the crypto winter wait for warmer days ahead.