Bitcoin Price May Have Hit Bottom as Miners Signal ‘Capitulation’: CryptoQuant Analysis
Cryptocurrency data indicates that the Bitcoin mining sector is currently experiencing a phase of “capitulation,” a development that often precedes a local price bottom for Bitcoin before a potential surge to new highs. This observation comes from CryptoQuant, a market intelligence platform that recently analyzed metrics related to miners, who play a crucial role in securing the Bitcoin network in exchange for newly minted BTC.
According to CryptoQuant’s report, various indicators of capitulation have emerged over the past month, coinciding with a 13% drop in Bitcoin’s price from $68,791 to $59,603. One significant sign of this capitulation is a notable decrease in Bitcoin’s hash rate, which represents the total computational power used to secure the network. After reaching a peak of 623 exahashes per second (EH/s) on April 27, the hash rate has since fallen by 7.7% to 576 EH/s, marking its lowest level in four months.
Historically, such sharp declines in hash rate have been associated with potential price bottoms for Bitcoin. The current drawdown of 7.7% mirrors a similar event in December 2022, when Bitcoin hit a price bottom of $16,000 before embarking on a more than 300% surge over the next 15 months.
This recent decline in hash rate follows Bitcoin’s fourth halving event in April, which halved the number of coins rewarded to miners. As per CryptoQuant’s analysis, miners have been facing significant revenue declines since the halving, leading many to shut down unprofitable mining operations.
Moreover, Bitcoin miners have been observed moving their coins out of on-chain wallets at an accelerated pace, suggesting potential selling pressure on BTC reserves. This increased outflow of coins has reached its highest volume since May 21, indicating a possible trend of miners selling off their holdings.
The combination of miner outflows, alongside selling activities from whales and national governments, has contributed to Bitcoin’s price correction in June, impacting the hash price—a metric that measures Bitcoin miner profitability per unit of computational power. The average hash price currently stands near all-time lows, highlighting the financial challenges faced by miners in the current market environment.
In conclusion, the recent data suggests that the Bitcoin mining industry is undergoing a period of adjustment and potential restructuring, which could have implications for the future trajectory of Bitcoin’s price and market dynamics.
