Things are not looking good fundamentally with BTC , as the so called “miner’s purge” that we’ve been talking about for the last few weeks is still going on, and as of right now the areas where Bitcoin mining is heavily concentrated is at risk of being shut down.
As if this is not enough, another thing that adds a tremendous amount of pressure on miners is the first difficulty adjustment that we had post 2020 halving.
This is the third significant downward adjustment since Nov 2019, If we compare the previous 2 downward adjustments that took place on March 2020 and November 2019, and their effect on BTC price, we can see that BTC Price also took a hit on both scenarios.
According to Bitcoin Difficulty Estimator, they’re predicting another downward adjustment between -17% and -11% to take place anywhere between June 4th and June 5th.
This will be the first time for difficulty to go down 2 times in a row in a very long time, which could also add pressure to the miners.
Now, It’s not a secret that China has the largest distribution of BTC mines in the world, with the largest btc mining pools being Chinese owned and controlled.
University of Cambridge recently put out some data where they break down the hash-rate by region in the nation, and it shows that Xingjiang region is in the first place with 35.76% of the of the hash-rate, followed by Sichuan with roughly 10% of the hash-rate. But why is this so important?
Well, there are news in the circulation reporting that Miners operating from this region are ordered to shut down. We did some deeper digging and found out that the whole story checks out, and there’s a document from The Peoples Government of Sichuan Province basically saying that all miners are ordered to shut down their operation in an orderly manner, and this has been going for some time now. So, if this stays limited to the single province such as Sichuan, it won't have any significant long term effect on BTC as the miner’s will be moved to other regions, but short term, it can surely add to the downward sell pressure.
Technically on the weekly time-frame we are still and the key levels are still valid.As you can see this is the fourth week in a row that we fail to break the 9500/10,000 resistance.The chart structure of the weekly is still the same, we still haven’t broken the previous lower high.The other thing that correlates with the $10,000 resistance and the chart structure I mentioned above is the trend-line, that is previously tested two times, and we are now going for that third touch.As a general rule of thumb you should know that the third touch of the trend-line is what makes or breaks the trend.
If we combine everything together, there are multiple indications that suggest another downward push.
On the daily time-frame the price has been ranging between $10,000 weekly resistance and intra-day 8900 support, thus forming a daily ascending trend-line. As there’s not much room left between the trend-line and the resistance for the price to continue ranging, we should be expecting a breakout in the next few days. A break of the daily trend-line could easily take us to 8000/8500 support.