Although bullish momentum is high, one analyst is saying miner capitulations are creating a strong divergence and hidden sell signal.

There have been ongoing discussions around how miners will respond to the coming halving event. As BeInCrypto previously reported, some analysts expected miners to dump their holdings before their operations become less profitable in a few weeks’ time.

Trader Mansasuma (@mansasuma) made a case yesterday that, in his words, will “crush some bullish dreams”—he argues that the ongoing miner capitulations may cause a ‘death drop.’

Miner Capitulations on the Rise?

At the time of writing, Bitcoin’s hashrate has recovered most of what it lost in March. Mining profitability has bounced back as well. However, Mansasuma (@mansasuma) sees a hidden divergence that should worry traders.

According to his chart, a strong divergence is currently present which mirrors the ‘death drop’ of late 2018. The market rebound, therefore, may be an opportunity for miners to unload and lock in profits before the halving event.

The opinion put forward by Mansasuma is controversial, to say the least. Most of the cryptocurrency market is bullish for the remainder of 2020, with many arguing that the ‘bottom’ was on March 12. It was then that even some long-term holders sold BTC during the panic.

The Bottom Line

There are two perspectives to take when it comes to assessing Bitcoin for the short-term. On the one hand, there are internal factors such as mining profitability and the upcoming halving event. On the other hand, however, there are macroeconomic factors that are now front-and-center amid this global economic crisis. Balancing both of these factors to assess future market movements is difficult, to say the least. So, as you might expect, predictions for the short-term have been as volatile as the market itself.

Bitcoin has historically correlated with the S&P 500, but we are currently going through unprecedented times. If miners are capitulating and using this rise as a moment to lock-in profits, then the market would need significant new money to absorb this sell pressure.

As of now, however, such bearish expectations are dashed by our current bullish reality: Bitcoin is up some 4.70% on the daily and is now trading above the $7,100 price point.