The Arrival of the Bitcoin Rally Didn’t Stop Mining Stocks from Declining

Bitcoin, the biggest cryptocurrency in the world by market capitalization, is going through a speedy rally at the beginning of 2024, shortly after the approval of the exchange-traded funds.

According to the Bitcoin price chart, growth is expected to continue over the following months and later into 2025, as the next halving event is set for late April 2024. At the moment, both investors and analysts are incredibly attentive to all market movements. While some predict losses are incoming, others remain optimistic, saying that the rally will continue more or less undeterred, at least until the $85K level.

Stocks 

As of March 5th, Bitcoin reached a new all-time high level, surpassing the 2021 levels. While the difference between the two levels was not extreme, it nonetheless sent ripples through the crypto community, especially because this event was not expected until after the halving. But despite these upward trends, mining stocks have traded relatively flat, dipping approximately 30%. There was a similar event in 2023, though, and at that time, investors saw it as an opportunity to buy the stocks they needed at a discount.

There are several reasons why this is believed to occur. One is that it is the direct result of misplaced weariness and that investors should follow the same patterns and acquire cheaper stocks. Some investors and analysts believe that the combination of the high BTC price and the low stocks could be a sign that Bitcoin and the ETFs could experience trouble in the future. The market frothiness past $65K caused many to keep their distance as well.

It’s also possible that investors don’t see the move of getting capital into mining stock as profitable ahead of the reward-slashing halving.

High-cost miners 

The behavior of the market ahead of the next halving event has also been thoroughly analyzed. There are many scenarios of what could happen, with the most likely being that some miners might be forced to move their processes off-shore. If the halving doesn’t yield as much profit as market participants expect, many of the facilities in the United States will have to find areas with lower costs that are more profitable. Otherwise, the investors might become discontent with the fees and rates when the companies don’t yield sufficient returns.

One of the proposed countries for the off-shore is Ethiopia. The nation generates most of its power from renewable sources. This is a good thing for the crypto environment that has been repeatedly accused of having an unreasonably high carbon footprint, sometimes consuming as much as some medium-sized countries. Kenya is another possible destination for American crypto mining. Similar to Ethiopia, Kenya gets 91% of its energy from green sources, with geothermal and hydropower being the favorites, followed closely by wind- and solar-generated electricity.

Argentina and Paraguay could also become destinations for miners unless they yield considerable profits. The former is particularly well-known for its crypto community, with many people using digital currencies in order to escape the hyperinflation of their local fiat.

L2 tokens 

Bitcoin price fluctuations affect the entire marketplace. When the king of crypto is doing well, the whole market prospers, and when it reaches a downside trend, the entire marketplace follows along. As Bitcoin reached the highest levels recorded in twenty-five months, layer-2 tokens surged as well. STX and RIF are some of the most notable examples, recording double-digit gains as part of the ongoing rally. Stacks, in particular, had some of the largest engagement rates over the last year of all digital assets.

The smart contract platform is focused on Bitcoin and went up 30% on February 27th. During the span of thirty days, the token essentially doubled in price. Social interaction levels have gone up by an astonishing 16,000. The excitement is naturally driven by the excitement of seeing the market grow so fast. Rootstock Infrastructure Framework is built on the Rootstock blockchain. This means that the smart contract capabilities are brought directly to Bitcoin. The platform also allows DApps.

Roughly $161 million of rootstock’s total value is locked on the BTC sidechains. This is approximately half of the asset’s value. In Stacks’ case, 43% is locked, or $138 million. Other native tokens have done well as well, seeing average increase rates of 20%. BRC-20 tokens, including Multibit, MEME, Pepe, INSC and TRAC surged as well.

Mining difficulty 

As of late February, the mining difficulty level surpassed 80 trillion. The metric shows how challenging it is to solve one of the cryptographic puzzles necessary to mint new coins or confirm transactions. These astounding figures are seen as being part of the market moves and changes which anticipate the arrival of the next halving event. The hash rate has exceeded 560 hashes per second. The investors who had kept an eye on this part of the market aren’t surprised, as the levels have been steadily growing since January 2023.

Over the next few months, the difficulty is expected to climb steadily and eventually land on the 100 trillion mark. In the aftermath of the halving, rewards will be cut in half. It remains to be seen how the market will develop in the aftermath of that particular event.

Satoshi emails 

Every piece of news is essential in the cryptocurrency environment, as even the smallest and seemingly most insignificant piece of information can change the price course for cryptocurrencies. The digital money community is interested in innovation, and every new piece of information is relevant. Recently, a series of emails were released when Martti Malmi, one of Satoshi Nakamoto’s earliest collaborators, revealed over 100 pages worth of correspondence. The emails were naturally interesting for the community, as they uncovered previously unknown information.

The emails were published on GitHub and are dated between 2009 and 2011. While those hoping for a hidden clue that could point them in the direction of Satoshi’s identity will probably remain disappointed, lore enthusiasts have reasons to rejoice. The writing style is similar to that of the initial Bitcoin whitepaper, known among members of the community for its straightforwardness and ability to keep things simple without negating their complexity.

The emails reveal that the duo didn’t coin the term “cryptocurrency” themselves and that their initial plan was to refer to Bitcoin as “digital P2P cash.”

The cryptocurrency market is set to have an interesting journey throughout the rest of 2024, and investors should take the necessary precautions to ensure their holdings and portfolios remain safe. A consistent yet flexible strategy can never go wrong.