When Bitcoin undergoes its fifth halving in April 2021, CryptoQuant’s founder Ki Young Ju has revealed intriguing profitability data for various investors. By examining X, Ju highlighted the substantial unrealized profits among different investor categories. Notably, old whales have emerged as the most profitable group.
Bitcoin Rewards Old Whales, Miners
Based on the information available, experienced Bitcoin investors, frequently referred to as “veteran whales,” have experienced an impressive 223% rise in potential profits that they have yet to realize. This finding indicates that their approach of keeping their Bitcoin for the long term has been profitable, as the value of Bitcoin has continuously risen both over extended periods and more recently.
Investors joining the market via traditional finance and ETFs, labeled as “new whales,” experienced a more subdued 1.6% growth in potential profits. This is likely due to their shorter investment duration and smaller initial investment amounts compared to veteran investors, referred to as “old whales.”
In the beginning of 2020, Decentralized Finance (DeFi) experienced significant growth after surpassing the $1 billion mark. On the other hand, Bitcoin spot ETFs, particularly in the US market, have been picking up steam since the Securities and Exchange Commission (SEC) gave their approval in January 2024.
It’s worth noting that both small-scale miners, typically operated by individuals or small businesses, and larger mining companies such as Riot Blockchain and Marathon Digital have experienced substantial growth. The unrealized profits for small-scale miners rose by a significant 131%.
During the same period, major mining companies, often large corporations trading on international stock exchanges, experienced a substantial 81% rise in potential profits from their bitcoin holdings. This trend suggests that prices have been climbing since October 2023, providing a substantial advantage as we approach the next competitive phase.
Hash Rate: A Key Metric To Watch Post-Halving
Based on the information provided, it can be inferred that early adopters have gained the most from this long-term trend, enjoying its advantages for an extended period. Yet, all miner categories have reaped significant rewards as well.
Despite this, it remains to be determined how miners will adapt to remain competitive and profitable in the future. The hash rate may decrease in the coming days, but larger mining operations are expected to weather the storm relatively unscathed, perhaps even strengthening their hold on the market. In contrast, smaller miners could face significant challenges, potentially leading to increased concentration among larger mining entities over time.
In the future, the hash rate will play a significant role. With anticipated price increases, miners will be motivated to purchase new equipment, thereby enhancing the network’s security.
If prices don’t rise after the halving, as happened with Litecoin and Bitcoin Cash, then there will be several adjustments to the mining difficulty. This will give even more power to large crypto mining operations.
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2024-04-20 05:11