It’s no secret that Bitcoin miners are currently facing significant financial pressure, especially after the fourth halving event. As a result, these vital network participants are forced to offload their Bitcoin holdings to offset the increasing operating costs.
Interestingly, the latest on-chain data shows that the Bitcoin market is experiencing a wave of capitulation from miners reminiscent of December 2022, barely a month after the FTX collapse. The question now is: what happened last time and how could it impact the current cycle?
Is Bitcoin ready to resume its bull run?
at recent days Posted on XCryptoQuant’s head of research, Julio Moreno, revealed that Bitcoin miner capitulation reached levels similar to December 2022. December 2022 also marks the bottom of the previous cycle after the FTX collapse.
The fall of the Sam Bankman-Fried-led exchange was a low point for the cryptocurrency industry, sparking widespread panic and massive sell-offs. Ultimately, this massive selling pressure led to a sharp drop in the price of Bitcoin.
At the time, the capitulation among Bitcoin miners was marked by a 7.6% drop in Network True Hashrate. According to Julio Moreno’s post on X, the Network True Hashrate drop is also currently at -7.6%.
A chart showing BTC's Network True Hashrate Drawdown and price | Source: jjcmoreno/X
The Network True Hashrate Drawdown metric measures the decline in computational power devoted to Bitcoin mining, reflecting miners’ struggle to maintain operations in a difficult financial situation. Naturally, a significant decline in Network True Hashrate and the associated miner capitulation has several potential impacts on the Bitcoin price.
As we have seen over the past few weeks, this can lead to an increase in selling pressure, as miners look to sell their coins. BTC holdings. This could put serious downward pressure on Bitcoin’s price, pushing its value to lower levels.
At the same time, periods of significant miner capitulation have historically preceded periods of market recovery. Furthermore, as explained in the post, the Bitcoin market reached the bottom of the cycle the last time (December 2022) that there was a decline in the network’s true hashrate at that point. This suggests that Bitcoin may indeed be ready for a price rebound soon.
Bitcoin Price at a Glance
At the time of writing, Bitcoin is trading at around $60,889, reflecting a 0.2% gain over the past 24 hours. The leading cryptocurrency is still suffering deep losses on the weekly timeframe, with a decline of over 5% in the past week.
The price of BTC on the verge of $62,000 on the daily timeframe | Source: BTCUSDT chart on TradingView
Featured image from iStock, chart from TradingView