- Bitcoin enthusiasts are bracing themselves for new lows amid a bland opening to the year.
- Underneath the charts, Bitcoin miners are seeing one of the most brutal capitulations since 2016 ahead of the network’s difficulty adjustment.
- The assets supply has also taken a hit in recent weeks as the impetus to sell is at an all-time low for holders.
Bitcoin (BTC) entered 2023 showing little signs of activity, but analysts are construing the data as the calm before the storm.
Bitcoin started the year with prices bouncing sideways without its inherent volatility. The doldrum in prices has left enthusiasts with little hope of a rally after a torrid 2022 that saw a staggering 64% loss.
BTC currently trades at $16,718, with the one-week chart indicating a decline of 0.75%. Transaction volumes over 24 hours are at an all-time low at $11.9 billion as popular on-chain analyst Pentoshi eyes $12,000 as a tentative support zone for the asset.
With the U.S. Consumer Price Index (CPI) report a week away, it is widely believed that traders are waiting on the sidelines to gauge the macroeconomic trends that could shape BTC’s future. BTC holders are also keeping a keen eye on the Federal Reserve on whether or not it would reverse its trend of rate hikes.
Away from macroeconomics, Bitcoin is set to undergo a difficulty adjustment which analysts say will eliminate the gain made by the network. Bitcoin’s network difficulty climbed 3.27% before Christmas, but with miners under pressure from the asset’s price performance, difficulty levels are expected to drop by as much as 3.5%.
Hashrate levels hit their lowest in 2022, and there is little sign of a trend reversal since the start of the new year. Charles Edwards Of Capriole Investments termed it “the most brutal Bitcoin miner capitulation since 2016 and possibly ever.
No volatility, no supply
As prices continue to swing sideways, Bitcoin is experiencing its highest levels of stationary assets in wallets. Glassnode reports that holders have little incentive to trade their BTC while speculators continue to watch from the sidelines as short-term BTC trading declines.
With supply drying up, investors remain unsure of the market’s general direction. Bitcoin’s Fear and Greed Index hovers at “fear” levels but could slip into extreme fear given the grim metrics around the network.
For now, investors can only watch with bated breaths to see how BTC holds up in the coming days.