Bitcoin miners are currently facing financial stress after the fourth halving event, leading to a mass sell-off of BTC to cover operational costs. The on-chain data shows a wave of miner capitulation similar to December 2022, following the collapse of FTX. This raises questions about the impact on the current cycle and whether Bitcoin is ready to resume its bull run.
Julio Moreno, CryptoQuant’s head of research, compared the current miner capitulation levels to December 2022, which marked the bottom of the previous cycle after FTX’s collapse. The significant selling pressure during that time caused a sharp decline in Bitcoin’s price. The Network True Hashrate Drawdown, a metric reflecting miners struggling to maintain operations, is currently at -7.6%, similar to the previous cycle’s levels.
The reduction in computational power dedicated to mining Bitcoin and the associated miner capitulation can lead to increased selling pressure, driving the price of Bitcoin lower. However, historical data suggests that periods of significant miner capitulation often precede market recoveries. The Network True Hashrate Drawdown reaching similar levels to the previous cycle indicates a potential price rebound for Bitcoin in the near future.
As of writing, the price of BTC is around $60,889, with a slight increase in the past 24 hours but a significant decline over the past week. The cryptocurrency market remains volatile, with potential for both downward pressure and recovery.
Overall, the current situation in the Bitcoin market reflects a delicate balance between miner capitulation and potential price rebounds. Traders and investors should closely monitor on-chain data and market trends to make informed decisions in this uncertain environment.
