The Crypto Market Stuck in a Range
Until Bitcoin (BTC) breaks its long-established $25-30k trading range, the crypto market is arguably in what some analysts have called a “crab market”. It is likely that a decisive macroeconomic or crypto-specific catalyst will be necessary to break out of it. This failed to occur in the month of September.
BTC price briefly tested the lower end of the established trading range and touched $25,200. In the second half of the month, however, the price recovered to $26,900 and posted a monthly close of +3.92%. This both bucked the historical trend of negative closes in September and went against traditional markets. The S&P 500 was down 5.4% over the same time frame.
Major Mining Companies Face Declines
Most publicly traded crypto companies faced a challenging month in September and their stocks underperformed. In many cases, share prices dropped by 10%–40% and the sector averaged a decline of 22.4%. Especially the crypto mining stocks were hit hard.
TeraWulf, Marathon Digital, and Iris Energy Limited all lost almost one-third of their valuation. The miners affected by these large corrections had rallied massively in the first half of the year, sometimes gaining +300%. However, share prices started to decline in July and have now mostly erased these previous gains. Some of the reasons for this correction are specific to the mining sector and are unlikely to affect crypto more widely.
Bitmain’s New Antminer Iteration
The large corrections in the stocks of mining companies can be attributed to a tightening of mining economics. In April of next year, the next Bitcoin halving event will occur, which will slash rewards for validating votes in half overnight. Despite this outlook, network hashrate and difficulty show no signs of slowing down and keep hitting all-time highs.
The result is that Bitcoin mining is becoming increasingly competitive by the day and profit margins are becoming slimmer. Once mining companies exhaust their ability to raise new capital, they could be financially squeezed after the halving unless Bitcoin puts in a significant rally.
In September, Bitmain, the largest producer of ASIC mining hardware, announced a new model of Antminer rigs that will intensify this competition further in the coming months. The new S21 rigs will have a mining efficiency of 17.5 J/TH — a more than 20% increase compared to the previous front-runner. Miners who manage to raise the capital for an upgrade quickly will be able to price out their competition once the effects of the halving kick in.
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Hot Take: Crypto Market Awaits Catalyst
The crypto market remains stuck within a trading range until Bitcoin breaks through its $25-30k range. Analysts believe that a significant catalyst is needed to drive a breakout. In September, BTC briefly tested the lower end of the range but ultimately closed the month with a +3.92% gain, defying historical trends and traditional markets.
Publicly traded crypto companies faced challenges, with mining stocks experiencing significant declines. TeraWulf, Marathon Digital, and Iris Energy Limited lost nearly one-third of their value due to tightening mining economics. The upcoming Bitcoin halving event, scheduled for April next year, will further intensify competition in the mining sector.
Bitmain’s release of the new Antminer S21 rigs, with increased efficiency, adds to the competition. Miners who can raise capital for the upgrade quickly will have an advantage after the halving. Despite these challenges, the Cointelegraph Research team remains committed to providing accurate and insightful content in the blockchain industry.
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