It’s no secret that Bitcoin miners are currently under significant financial stress, especially after the end of the fourth halving event. As a result, these essential network participants are forced to unload their BTC assets to offset increased operational costs.
Interestingly, the latest on-chain data shows that the Bitcoin market is experiencing a wave of miner capitulation reminiscent of December 2022, just a month after the FTX collapse. The question now is, what happened last time and how could it impact the current cycle?
Is BTC ready to resume its bull run?
In a recent post onCryptoQuant Head of Research Julio Moreno revealed that the capitulation of Bitcoin miners reached levels comparable to December 2022. December 2022 also represented the bottom of the previous cycle after the collapse of FTX.
The collapse of the Sam Bankman-Fried-led exchange marked a low point for the cryptocurrency industry, triggering widespread panic and massive selling. Ultimately, this enormous selling pressure potentiated a sharp decline in the price of Bitcoin.
At the time, the capitulation of Bitcoin miners was characterized by a 7.6% drop in the network’s real hash rate. According to Julio Moreno’s post on X, the network’s real hash rate is also currently -7.6%.
A chart showing BTC's Network True Hashrate Drawdown and price | Source: jjcmoreno/X
The Network True Hashrate Drawdown metric calculates the reduction in computing power dedicated to Bitcoin mining, reflecting miners’ struggles to maintain their operations in a tight financial situation. Naturally, the significant decline in Network True Hashrate and capitulation of associated miners have several potential impacts on the price of Bitcoin.
As we have seen over the past few weeks, this may lead to increased selling pressure as miners look to sell their assets. BTC holdings. This could put strong downward pressure on the price of Bitcoin, causing its value to fall to lower levels.
At the same time, periods of significant miner capitulation have historically preceded market recoveries. Additionally, as the article points out, the Bitcoin market hit a cycle bottom the last time (December 2022) the Network True Hashrate Drawdown occurred at this point. This suggests that BTC may indeed be poised for a price rebound soon.
Bitcoin Price at a Glance
As I write these lines, the BTC price Bitcoin price is hovering around $60,889, reflecting a 0.2% increase over the past 24 hours. The leading cryptocurrency is still deep in the red on the weekly time frame, down more than 5% over 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
