Bitcoin to Suffer Massive Slump If Miners Go Bankrupt: Messari

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Bitcoin, the most valuable cryptocurrency in the world by market capitalization, is expected to experience increased selling pressure if mining companies begin declaring bankruptcy, according to cryptocurrency analytics firm Messari.

Public Bitcoin miners have been compelled to liquidate their shares to fund their activities. Due to a double dose of ill luck following the rising Bitcoin mining difficulty and falling pricing, mining companies are struggling to survive. Additionally, because of high prices, miners are having trouble paying their electrical bills.

The largest Bitcoin mining operation in the world, Core Scientific, startled the market earlier this week when it announced that it was considering filing for bankruptcy due to its precarious financial situation. On hearing the news, the publicly traded company’s shares plunged a staggering 77%. The company’s stock is currently down a startling 98% annually.

The cryptocurrency miner will probably go bankrupt before the end of the year since its financial reserves will be exhausted as a result of a drastic drop in net income.

The business is currently making frantic efforts to acquire additional funding, but if this strategy is unsuccessful, it will have to declare bankruptcy.

According to Leigh Drogen, CIO of Starkiller Capital, “every other” Bitcoin miner is having similar issues. This shows that there may be a serious problem in the mining sector.

Another Bitcoin mining operation, Compute North, declared bankruptcy last month.

Bitcoin Rally Might be Bull Trap

In other news, since the first cryptocurrency has not been exhibiting any indications of an impending price surge, reports suggest that the most recent rally in Bitcoin might be viewed as surprising. However, based on the short squeeze, it is safe to infer that whales were preparing for an increase in momentum.

Large investors were allegedly driving the price of the first cryptocurrency upward on purpose, creating at least two significant short squeezes as it approached $20,000.

 

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Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.