It is no secret that bitcoin miners are currently experiencing significant financial stress, especially after the completion of the fourth halving event. As a result, these vital network participants are forced to dump their btc holdings to offset rising operating costs.
Interestingly, the latest on-chain data shows that the bitcoin market is experiencing a wave of miner capitulation reminiscent of the one in December 2022, just a month after the FTX collapse. The question now is: what happened last time and how could it affect the current cycle?
Is btc ready to resume its uptrend?
In a recent x.com/jjcmoreno/status/1806824995865198722″ target=”_blank” rel=”noopener nofollow”>Post on xCryptoQuant head of research Julio Moreno revealed that bitcoin miner capitulation has reached levels comparable to December 2022. December 2022 also represented the bottom of the previous cycle after the FTX collapse.
The collapse of the exchange led by Sam Bankman and Fried marked a low point for the cryptocurrency industry, triggering widespread panic and sell-offs. Ultimately, this enormous selling pressure fueled a steep decline in the price of bitcoin.
At the time, the capitulation among bitcoin miners was marked by a 7.6% reduction in the Network True Hashrate. According to Julio Moreno's post on x, the Network True Hashrate Drawdown is also currently at -7.6%.
A chart showing btc's Network True Hashrate Drawdown and price | Source: x.com/jjcmoreno/status/1806824995865198722" target="_blank" rel="noopener nofollow">jjcmoreno/x
The Network True Hashrate Drawdown metric calculates the reduction in computational power dedicated to bitcoin mining, reflecting miners’ struggles to maintain operations in a difficult financial situation. Naturally, the significant reduction in Network True Hashrate and the associated miner capitulation have several potential impacts on the price of bitcoin.
As seen in recent weeks, this may lead to an increase in selling pressure as miners look to sell their btc Holdings. This could put a lot of downward pressure on the price of bitcoin, driving its value to lower levels.
At the same time, historically, periods of significant miner capitulation have preceded market recoveries. Furthermore, as highlighted in the post, the bitcoin market hit the bottom of the cycle the last time (December 2022) that the actual drop in the network's hash rate occurred at this point. This suggests that btc could really be primed for a price rally soon.
bitcoin price at a glance
At the time of writing, the btc price is around $60,889, reflecting a 0.2% increase in the last 24 hours. The top cryptocurrency is still in the red on the weekly period, down more than 5% last week.
The price of btc on the verge of $62,000 on the daily timeframe | Source: BTCUSDT chart on x/rJWKjAAF/" target="_blank" rel="noopener nofollow">TradingView
Featured image from iStock, chart from TradingView
