Are Bitcoin Miners Capitulating Amid the Drop Below $60K?

The Bitcoin network is showing some signs of miner capitulation. This phase is characterized by miners either stopping work or selling a portion of their Bitcoin reserves.

Interestingly, this process has historically been associated with Bitcoin prices hitting bottom, after which the asset is expected to resume its much-needed upward trend.

Signs of Bitcoin Miners Surrendering

Since the last halving, the network’s hash rate has fallen by 7.7% from its peak on April 27. According to a recent CryptoQuant report, this decline suggests that less efficient miners may have shut down their equipment due to negative profitability.

CryptoQuant’s Miner Profit/Loss Sustainability Index reveals that miners have been paid significantly less since April 20, the day after the Bitcoin halving in 2024.

Daily revenue has fallen 63% from $79 million on March 6 to $29 million today, with transaction fees making up just 3.2% of total revenue, the lowest share since April 8.

The average mining revenue per hashrate (hash rate) is also hovering near an all-time low of $0.049 per EH/s, just above the record low of $0.045 reached on May 1. Additionally, miners have been moving Bitcoin from their wallets at an increasing rate, with daily outflows hitting their highest volume since May 21, indicating potential selling.

This current phase of miner capitulation mirrors the 7.7% hashrate drop seen in December 2022, the period that saw the bottoming cycle following the FTX collapse. Historically, such large drops have been associated with price bottoming conditions.

Darkest before dawn?

What confirms the hypothesis that the price has reached a bottom is the fact that Bitcoin is currently trading at a significant discount on Coinbase, a sign that may indicate that the asset is paving the way for the next upward move.

Falcon’s head of research, David Lawant, recently pointed out the same thing in mail On X, wondering if “it’s always darkest before the dawn.” The CEO highlighted that the last time Coinbase’s premium was negative, it was followed by a massive rally from October 2023 to March 2024.

As a result, the current discount may be a prelude to a much-needed price hike.