- The Bitcoin miner capitulation could ease the selling pressure on Bitcoin from miners.
- Metrics supported the idea that Bitcoin prices would have a bullish trajectory in the coming weeks.
As a seasoned crypto investor with several years of experience under my belt, I believe that the ongoing Bitcoin miner capitulation could be a good sign for the market. The hash rate drawdown and the subsequent miner behavior suggest that miners are facing financial pressure and may choose to hold onto their coins instead of selling them in large quantities.
Bitcoin [BTC] miner capitulation was gathering strength and was comparable to 2022 December.
As a crypto investor, I’ve observed an intriguing observation from Julio Moreno, the head of research at CryptoQuant. In a recent post on X (previously known as Twitter), he pointed out that the Bitcoin hash rate experienced a drawdown of 7.6%. Essentially, this means that there has been a decrease in the computing power required to validate transactions on the Bitcoin network by approximately 7.6%. This could potentially indicate a bearish trend, but further analysis and context are necessary to fully understand its implications.
It must be noted that prices are not down directly as a result of this hash rate plunge.
As a researcher studying the Bitcoin market, I would identify several key factors contributing to its decline from $71k to $60k in June. These include the halving’s impact, shifting market sentiment, and miners’ need to upgrade their equipment and maintain competitiveness.
The Bitcoin miner capitulation might be good news
As a Bitcoin network analyst, I’d explain that the idea of miner capitulation is significantly linked to the current hash rate of the Bitcoin network. Hash rate represents the total computational power being used by Bitcoin miners and, at present, it stands at 537.15 Exahashes per second (EH/s).
The chart showing the mining hash rate demonstrated a decline of 7.6%, mirroring the decrease seen following the FTX exchange collapse in November 2022 and the deepening pessimism in the market during December 2022.
As a crypto investor, I examined the miner profitability chart and noticed that miners had been significantly overcompensated around early June.
As a researcher looking back on the situation, I can now acknowledge that our financial circumstances had significantly worsened just two weeks prior. The value of Bitcoin had taken a downturn, resulting in a 16.2% decrease in price within that timeframe. Consequently, we found ourselves earning far less than what was required to meet our expenses.
At press time, the sustainability metric was crossing over from extremely underpaid to fairly paid.
As an analyst, I would interpret this situation by saying that when a metric dips into underpaid territories, it doesn’t necessarily mean we have reached a local minimum. However, it does indicate that miners may hold off on selling until more favorable prices emerge.
How heavy are the miner outflows in recent weeks?
The Miners’ Position Index calculates a ratio by combining the current USD outflows from miners with the averaged outflows over the past 365 days.
The trend of the ratio indicates how miners are behaving in terms of transferring more or fewer Bitcoins to exchanges.
Read Bitcoin’s [BTC] Price Prediction 2024-25
Miner withdrawals from the network noticeably surged in February and March, experienced a slight decrease in April and May, and exhibited minimal activity in June. Consequently, miners have been transferring fewer coins to exchanges compared to typical volumes.
In summary, the decrease in Bitcoin’s hash rate underscores the notion that miners are giving up on their operations. Additionally, the Mining Productivity Index (MPI) data indicates that miners have been selling off fewer Bitcoins than typical, which is a positive sign for the market’s future prospects.
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2024-07-02 08:07