PARITY Draft Controversy: The claim that miners are leaving is unfounded; the decline looks more like a leverage liquidation

Discussion Draft Ignites Emotions, But “Mining Tax” Panic is Exaggerated

Representatives Miller and Horsford have released a discussion draft of the “Digital Asset PARITY Act.” The market initially thought it was just a routine tax review, only to find that the draft greenlights stablecoin transactions under $200, clarifies the handling of staking income, but fails to mention the double taxation issue concerning Bitcoin mining. Conner Brown directly criticized it for “taking sides,” with his tweet being shared by over 15 influential accounts, prompting the community to quickly rally and voice their opinions.

Public sentiment indeed has an impact: the Fear and Greed Index has dropped to 14, but Bitcoin still ranks high on the “mind share” list; MVRV is at 1.27, indicating reasonable valuation and certainly not a “surrender” signal. Pierre Rochard criticized the draft for “favoring stablecoins similar to fiat,” while Cody Carbone from the Digital Chamber believes it’s a good thing that “regulatory clarity is returning to the homeland.”

The factors truly driving prices are more direct: Brown’s tweet heat combined with Bitcoin’s drop to $68,791 on March 27, during which $184 million was liquidated, mostly among long positions (approximately 15:1), with both the 1-hour and 4-hour RSI dropping below 30; however, the funding rate remained neutral (0.27%). The policy noise amplified a leverage washout that was already brewing.

• Derivatives: The total open contracts in the market remain close to $9.9 billion after significant volatility, resembling a short “kill shot” on high-leverage longs rather than a large-scale establishment of new short positions.
• On-chain: NUPL is at 0.21, within the accumulation range, with prices still above the realized cost support of $54,286.
• Mining: Protocol fees are approximately $164,871, with miner total income stable, costs and incentives roughly balanced, showing no signs of a profit crisis.

My judgment is that the narrative of “miners leaving” is more of a narrative noise. This is still just a discussion draft, far from congressional debate. In the absence of macro disturbances like soaring energy costs, a single policy text is unlikely to impact hashrate or TVL significantly. Treating it as systemic risk equates to viewing “advocacy games” as “fundamental changes.”

Positions and Trading Implications

Probability and Trading Calibration

• Volatility: Daily ATR is about 2941, with short-term volatility trending upwards.
• Price Path: Technical oversold conditions and reasonable valuations create resonance; if the community pushes for milder wording in the draft, the probability of a rebound above $70,000 exceeds 70%.
• Strategy Implications:
  • Spot and low-leverage longs: Gradually accumulate during pullbacks;
  • Derivatives: Avoid chasing shorts when crowded;
  • Mining and infrastructure assets: Fundamentals are intact, policy disputes instead enhance bargaining power and organization, consider increasing positions when appropriate.

Core Conclusion: The current narrative is driven by “stablecoins first” sparking mobilization within the Bitcoin community, but data does not support claims of “miners leaving” or “deteriorating fundamentals.” Price declines are primarily a result of leveraged liquidations, not a trend reversal.

Judgment: Emotional traders are already trailing behind. The current environment is more favorable for long-term holders and mining/infrastructure builders. The strategy should prioritize accumulation on dips, with low success rates for short-term shorts.