Bitcoin Continues Rebound Despite 'Mining Capitulation'... Has It Really Bottomed Out?

Tesla Coin Holds at $23,000 Despite Sales
Exchanges' Successive Withdrawal Bans and Bankruptcy Concerns Weigh
Calls for Cautious Investment "Need to Confirm Impact of US Interest Rate Hikes"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] Bitcoin, which had fallen below the psychological support level of $20,000 last month due to adverse factors such as the US interest rate hike trend and the Ukraine crisis, has recently shown a rebound, drawing investors' attention. Despite the phenomenon of 'Miner Capitulation,' where mining companies sell more cryptocurrency than they mine, the price rebound continues, raising expectations that a trend reversal will follow.

However, experts warn that despite the recent temporary rebound, the investment environment surrounding cryptocurrencies remains unfavorable, urging caution. There are ongoing concerns about additional crashes as related companies, including cryptocurrency exchanges, continue to suspend withdrawals and face bankruptcy risks.

According to cryptocurrency media CoinDesk on the 20th (local time), Bitcoin was trading at $23,233.50, down 0.66% from the previous day. Although Bitcoin recovered to the $24,000 level during the day, it entered a downward trend after news that Tesla, the US electric vehicle company, sold 75% of its Bitcoin holdings, but it continues to maintain the $23,000 level.

Earlier, after the cryptocurrency Luna-Terra crash incident in early May, investor sentiment froze further, and Bitcoin fell to the $18,000 range last month. However, optimism has emerged this month that cryptocurrency prices have bottomed out across the market, and with Ethereum, which leads the cryptocurrency market alongside Bitcoin, scheduled for updates starting in September, expectations for an improved market environment have sparked a rebound.

In particular, optimism is gaining strength as the rebound continues despite the ongoing Miner Capitulation phenomenon, where mining companies sell more cryptocurrency than they mine.

According to Bloomberg, major Bitcoin mining companies have been reducing mining output due to decreased profitability caused by soaring electricity costs amid increased demand for cooling power during global heatwaves in the US and Europe. For example, Argo Blockchain, a UK-based Bitcoin mining company, reportedly sold more than 3.5 times its mined amount last month, selling 637 BTC to the market compared to 179 BTC mined, Bloomberg reported.

However, market experts warn that the US interest rate hike trend, which has the greatest impact on the cryptocurrency market including Bitcoin, remains a significant burden, and the rebound level is not large enough considering the previous crash, so caution is necessary.

Joe DiPasquale, CEO of cryptocurrency asset management firm BitBull Capital, said in an interview with investment media Barron's, "Although positive momentum has emerged for Bitcoin, the price still remains within a box range," adding, "If Bitcoin maintains the $22,000 level until the end of this month after the US interest rate hike results are confirmed next week, it could potentially confirm a long-term bottom."

Concerns over the suspension of withdrawals and bankruptcy risks at cryptocurrency exchanges are also feared to hamper the price rise. According to CNBC, on the same day, cryptocurrency exchange Zipmex, based in Singapore and Thailand, announced it would suspend withdrawals due to financial difficulties. Zipmex stated on Twitter, "Due to volatile market conditions and financial difficulties of key business partners, we are suspending withdrawals."

This is reportedly linked to financial problems at Babel Finance, known as a major investor in Zipmex. Babel Finance, a cryptocurrency collateral lending company, had earlier announced a full suspension of customer withdrawals. So far, along with these two companies, six firms including Celsius Network, Voyager Digital, Bold, and CoinFlex have announced consecutive suspension of withdrawals.

This content was produced with the assistance of AI translation services.