Bitcoin Mining Trends and Market Signals Indicate Potential Bottoming

Bitcoin's hashrate has seen a notable decline of 4% as of December 15, 2023, a trend that analysts from VanEck believe may signal a potential bottom for the cryptocurrency. Historically, a decrease in hashrate has correlated with positive forward returns for Bitcoin; specifically, since 2014, 90-day forward returns have been positive 65% of the time following a hashrate decline.

Currently, Bitcoin is trading at $88,400, significantly down from its all-time high of $126,080 in early October. The breakeven electricity price for Bitcoin miners has also dropped by nearly 36%, reflecting the challenging environment for miners.

Additionally, rising perpetual open interest in Bitcoin futures has been observed, increasing from 304,000 to 310,000 BTC as traders position for a potential year-end rally. The funding rate has risen, indicating bullish sentiment among traders, although it also raises concerns about market overheating.

This bullish outlook is compounded by the upcoming expiry of over $23 billion in Bitcoin options contracts on December 26, which could amplify market volatility depending on price movements ahead of the expiration date.

Call options are concentrated around the $100,000 and $120,000 strike prices, while puts are focused around $85,000, suggesting a lopsided betting environment as traders prepare for potential price shifts.