Until Bitcoin (BTC) breaks its long-established $25,000–$30,000 trading range, the crypto market is arguably in what some analysts have called a “crab market.” It is likely that a decisive macroeconomic or crypto-specific catalyst will be necessary to break out of it. This failed to occur in the month of September.
The BTC price briefly tested the lower end of the established trading range and touched $25,200. In the second half of the month, however, the price recovered to $26,900 and posted a monthly close of +3.92%. This both bucked the historical trend of negative closes in September and went against traditional markets. The S&P 500 was down 5.4% over the same time frame.
However, Bitcoin’s relative resilience did not stabilize the industry as a whole. Crypto stocks were hit with an even bigger correction than the S&P, and altcoins continued their month-long losing streak against BTC. As every month, the Cointelegraph Research Investor Insights report provides an overview of industry-wide developments. It is an invaluable resource, especially in bear market conditions when many of the less mature sectors of the industry drop out of the news headlines.
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Most publicly traded crypto companies faced a challenging month in September, and their stocks underperformed. In many cases, share prices dropped between 10% and 40%, and the sector averaged a decline of 22.4%. Crypto mining stocks were hit especially hard.
TeraWulf, Marathon Digital and Iris Energy all lost almost one-third of their valuation. The miners affected by these large corrections had rallied massively in the first half of the year, sometimes gaining +300%. However, share prices started to decline in July and have now mostly erased these previous gains. Some of the reasons for this correction are specific to the mining sector and are unlikely to affect crypto more widely.
The large corrections in the stocks of the mining stocks can, among other things, be attributed to a tightening of mining economics. In April 2024, the next Bitcoin halving event will occur, which will slash rewards for validating votes in half overnight. Despite this outlook, network hash rate and difficulty show no signs of slowing down and keep hitting all-time highs.
The result is that Bitcoin mining is becoming increasingly competitive by the day, and profit margins are becoming slimmer. Once mining companies exhaust their ability to raise new capital, they could be financially squeezed after the halving unless Bitcoin puts in a significant rally.
In September, Bitmain, the largest producer of ASIC mining hardware, announced a new model of Antminer rigs that will intensify this competition further in the coming months. The new S21 rigs will have a mining efficiency of 17.5 J/TH — a more than 20% increase compared to the previous front-runner. Miners who manage to raise the capital for an upgrade quickly will be able to price out their competition once the effects of the halving kick in.
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