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93% of Bitcoin is Profitable; How Are the Bitcoin Miners Reacting?

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Bitcoin is in a state of euphoria over the last few days. The largest digital asset was finally able to overcome its psychological resistance at $10,000 and, at the moment, the asset has sustained a position above the range for more than 24 hours. With Bitcoin ‘s valuation taking a huge step forward, the impact has also transcended its on-chain fundamentals.

bitcoin supply

According to Glassnodes’ weekly report, Bitcoin Global on-chain metric index improved by 8 points, taking up its score to 70 in the charts. Liquidity made minor gains whereas Market Sentiment was brimming high with confidence, registering an improvement of 34 points over the past week.

93% of Bitcoin Supply is in state of Profit

bitcoin exchange net flow

After breaching past the $10k mark, the report suggested that the percentage of BTC supply that was in profit had risen up to to 93%. Only 11 percent of the current supply, if taken out would incur a loss and such a situation was driving the speculators out of the picture.

bitcoin

As observed in the above chart, the improved profitable holdings in Bitcoin were leading towards an increased inflow of BTC to exchanges. It is fairly obvious that users were making the most of the situation, as they were trying to cash when their profitability was on a high after months of stagnation. The desire to sell was quite high as the net flow witnessed by exchanges registered a new high over the past couple of months. The report said,

“After months of bitcoin flowing out of exchanges, the net flow is now seeing its largest hourly spike in over 3 months.”

BTC Miners refusing to Budge

Now, in spite of the high profitability of the BTC supply, Bitcoin miners pictured a surprisingly adamant behavior.

bitcoin minor outflow volume

When Bitcoin appeared to drop back in May, fears of miner capitulation was quite high as analyst expected that whenever Bitcoin reaches past $10,000 again, the miners are most likely to capitalize on the profits.

However, that hasn’t been the situation at the moment. The chart above illustrates that Miner Outflow Volume for Bitcoin has been keeping low in the charts, which suggested underlying confidence in Bitcoin’s potential.

With Miners standing firm in the industry, there is a sense of optimism surrounding BTC at the moment, as the largest digital asset enjoyed its lucrative rally.

Bitcoin: Is BTC Adoption From a Payments Perspective, a Pipedream?

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It is difficult to argue for or against the status of Bitcoin’s adoption. Do more people know about Bitcoin over the past few years? Yes, they certainly do but the idea of Bitcoin, how it was initially imagined, largely differs from what it is to the current financial industry. The change in idolization has permeated into its adoption path as well.

As BTC was originally introduced, it was intended to eliminate the involvement of third-party and act as a medium of exchange or transaction. However, the improved narrative of Bitcoin as a Store-of -value has now taken over the argument.

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Glassnode statistics recently revealed a dataset that revealed that the percent of Bitcoin supply held by entities with balances under 1 BTC was extremely less.

Only 0.89 percent of addresses held between 0.01 and 0.1 BTC and 0.15 percent of addresses held between 0.001-0.01 BTC. In comparison, if you combine the number of entities holding between 1-10,000 BTC, the total would be close to 60 percent of the address. 22.09 percent kept between 1,000 and 10,000 BTC alone.

It was obvious that users rarely used Bitcoin for a small transaction, and their ideology of BTC as a SoV was much more evident than BTC as a Medium Exchange (MoE).

Hence, it is a plausible argument that Bitcoin being adopted from an MoE perspective is largely diminishing in the industry.

Is Self-Custody of Bitcoin dead?

Now, the above data also inclines towards the fact that more and more users were storing their assets in centralized platforms. Although Bitcoin was supposed to attain the idea of a decentralized form of capital, the “trustlessness factor” of crypto exchanges continued to lure users into their platforms.

Certain Decentralized Exchanges or DEXs have made an entrance in the past few years but they have hardly garnered the same enthusiasm from the users, storing their assets in centralized exchanges.

glassnode studio bitcoin exchange balance

However, 2020 has been observing a change in that aspect as more and more people have taken their BTC assets out of exchanges. As of today, Bitcoin on Exchanges has greatly reduced since registering a high in 2020.

Recent reports also suggested that Shapeshift, a self-custody platform is launching a mobile trading app for iOS and Android users to purchase and seek crypto assets without disclosing their private keys to a third party.

Hence, in spite of the growth witnessed by centralized exchanges, the Self-custody of Bitcoin is still evident in some users, which falls right into the primary ethos of Bitcoin.

Bitcoin Exchanges and Payments to be Regulated as MSBs in Canada; Move a Major Win After Years of Lobbying

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The cloud of uncertainty surrounding bitcoin regulations has always been a major obstacle on the road to mainstream adoption. Despite the positive comments made by many mainstream officials, the cryptocurrency industry still suffers from the stigma ingrained in society.

In a major win for Bitcoin enthusiasts, Canada officially accepted Bitcoin as a regulated form of money. Bitcoin-based businesses in the country will be treated like any other form of business involved in currency exchange or payment processing.

In a series of tweets by Francis Pouliot, Chief Executive of BitcoinBull, it was explained how Bitcoin went from being considered a rogue asset to being an integral part of the financial ecosystem. Canada was one of the countries still dealing with the concept of cryptocurrencies at its nascent stages, with Pouliot playing a central role. According to the BitcoinBull official:

“The decision to add Bitcoin businesses to Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act was made by Parliament in 2014 as part of Bill C-31 but it took 5 years to agree/negotiate what specific activities are covered and the technicalities of regulation.”

Pouliet admitted that he was not fully satisfied with the latest decision because some of the requests that had been made earlier had still been skirted. Under the new amendments, any user involved in transactions above the $10,000 mark must report this to the specific financial authorities. This particular decision differs in the case of fiat currencies because it does not apply to fiat bank transactions.

According to the Bitcoin evangelist, typical users do not need to worry about new regulations because they will not be affected internally. New changes will definitely affect cash-based businesses like the Bitcoin ATMs and the Bitcoin business. Organizations that already have strict KYC laws do not need to worry about changes due to their stance within the government. It is expected that additional provisions, such as large-scale virtual currency transaction reporting, will also be included in the Regulations by 1 June 2021.

It is stated that Canadian MSBs that are regulated for AML purposes must identify certain customers either because of an ongoing service agreement or because the customer performs specific types of transactions. Pouliot claimed that stronger regulations exist in the future, but more work needs to be done. At press time, Bitcoin enjoyed a bullish hold on the charts. The largest cryptocurrency in the world traded $9530 with a total market cap of $175,289 billion.