An analyst explained that bitcoin has historically recovered from bearish phases like the one the cryptocurrency is going through.
bitcoin Hash Tapes Show Miner Capitulation Is Underway
in a new x.com/woonomic/status/1803926249036710234″ target=”_blank” rel=”noopener nofollow”>mail In x, analyst Willy Woo analyzed the relevance of the bitcoin hashrate for the recovery of the asset's price. “Hashrate” refers to a measure of the total computing power that miners currently have connected to the network.
The trend in this metric can be seen as a representation of the situation among these chain validators. When the indicator rises, it suggests that miners find the chain attractive to mine at the moment.
On the other hand, a decrease in the metric implies that some miners have decided to disconnect from the network, potentially because it is not currently profitable for them to mine btc.
One way to assess whether any of these behaviors constitute a sustained trend can be through “hash tapes.” This indicator compares a short-term moving average (MA) of the hashrate with a long-term one.
When the former falls below the latter, the miners capitulate en masse. Similarly, a reverse-type crossover suggests that capitulation among this cohort has ended.
Now, how do hash tapes relate to the price of the asset? As Woo points out, bitcoin shows recovery when “weak miners die and the hash rate recovers.” This corresponds to the market phase in which the capitulation has ended.
Below is the hash tape chart shared by the analyst showing what the miners situation looks like right now.
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/06/When-will-Bitcoin-recover-A-renowned-analyst-says-this.jpeg" alt="bitcoin hash tapes” width=”1538″ height=”1124″/>
The data for the btc hash ribbons over the past several years | Source: x.com/woonomic/status/1803926249036710234/photo/1" target="_blank" rel="noopener nofollow">@woonomic on x
As shown in the chart, bitcoin hash tapes indicate that miners are undergoing capitulation. The reason behind this bad situation of the miners lies in the Halving event that occurred in April.
Halvings are periodic events that occur every four years and permanently reduce the network's block rewards by half. Block rewards here, naturally, refer to the rewards that miners receive as compensation for solving blocks on the chain.
These rewards make up the majority of this cohort's income, so cutting them in half can drastically impact their finances. As such, it is not surprising that the hashrate has been trending downward recently.
Something interesting about the latest capitulation is that the hash tapes have been giving this signal for 61 days now. “This one is for the record books as it is taking a long time for miners to capitulate after the halving,” says Woo.
For comparison, here's a close-up view of what the stressful mining period was like in 2016:
<img loading="lazy" decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/06/1719061629_773_When-will-Bitcoin-recover-A-renowned-analyst-says-this.jpeg" alt="bitcoin miners capitulation 2017″ width=”1578″ height=”1190″/>
The miner capitulation event leading up to the 2017 bull run | Source: x.com/woonomic/status/1803926251163258990/photo/1" target="_blank" rel="noopener nofollow">@woonomic on x
It took miners 24 days to see a recovery back then, which is notably shorter than the duration of the capitulation event in the current cycle so far. 2020's was even shorter, with hash tapes seeing the reverse crossover in 8 days.
<img loading="lazy" decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/06/1719061629_47_When-will-Bitcoin-recover-A-renowned-analyst-says-this.jpeg" alt="bitcoin Miner Recovery 2020″ width=”1608″ height=”1130″/>
The 2020 miner capitulation | Source: x.com/woonomic/status/1803926253273067933/photo/1" target="_blank" rel="noopener nofollow">@woonomic on x
It now remains to be seen when the hash tapes will cross again this time and whether the recovery of the miners will also lead to a recovery in the price of bitcoin.
btc Price
At the time of writing, bitcoin is trading at around $63,900, a drop of more than 4% over the past week.
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Looks like the price of the coin has been on the decline recently | Source: BTCUSD on TradingView
Dall-E Featured Image, woocharts.com, TradingView.com Chart
