Bitcoin Miners Showing Signs of Capitulation as Price Dips Below $60K
The Bitcoin network is currently displaying indications of miner capitulation, a phase characterized by miners either halting operations or selling portions of their Bitcoin reserves. This phenomenon historically correlates with a stabilization of Bitcoin prices, typically leading to a resurgence in the asset’s value.
Following the recent halving, the network hash rate has decreased by 7.7% from its peak on April 27. Analysis from CryptoQuant suggests that this decline implies that less efficient miners may have shut down their mining equipment due to unfavorable profitability conditions. The miner profit/loss sustainability indicator by CryptoQuant highlights that miners have been experiencing significant underpayment since April 20, which coincided with the 2024 Bitcoin halving.
Revenue generated by miners has seen a drastic decline, plummeting by 63% from $79 million on March 6 to the current $29 million, with transaction fees contributing only 3.2% to the total revenue, the lowest proportion since April 8. The average mining revenue per hash (hash price) is currently close to all-time lows at $0.049 per EH/s, slightly above the record low of $0.045 recorded on May 1. Moreover, miners have been transferring Bitcoin out of their wallets at an accelerated pace, with daily outflows reaching their highest level since May 21, indicating potential selling activities.
This current phase of miner capitulation mirrors a 7.7% hash rate reduction observed in December 2022, a period that marked the bottom cycle post the FTX collapse. Such substantial declines in hash rate have historically been associated with price-bottom scenarios.
In further support of the price-bottom theory, Bitcoin is presently trading at a notable discount on Coinbase, suggesting a potential setup for an upcoming upward trend. David Lawant, Falcon’s head of research, recently mentioned in a post on X the concept of “always darkest before the dawn.” He pointed out that the last time the Coinbase premium exhibited such negativity, it was followed by a substantial rally from October 2023 to March 2024, indicating that the current discount could precede a much-anticipated market rally.
In conclusion, the ongoing miner capitulation phase and the associated indicators suggest a potential turning point for Bitcoin prices, with historical patterns hinting at a possible resurgence in the asset’s value in the near future.
