Bitcoin Miners Face ‘Capitulation’ as Profits Diminish Amid BTC Sell-Off
Bitcoin miners are facing a critical phase known as “capitulation” as their profits diminish amidst a sell-off in the Bitcoin market.
In a recent post on X, market intelligence firm CryptoQuant revealed that the metrics measuring miner capitulation are nearing the levels observed during the market bottom following the FTX crash in late 2022, suggesting a potential bottom for Bitcoin.
Miner capitulation occurs when miners reduce their operations or sell a portion of their mined Bitcoin and reserves to sustain their operations, earn yield, or hedge their Bitcoin exposure.
Over the past month, CryptoQuant analysts have identified several signs of capitulation coinciding with a 13% drop in Bitcoin’s price from $68,791 to $59,603.
#Bitcoin Miner capitulation mirrors Dec 2022 levels with a 7.7% hashrate drop, similar to post-FTX collapse conditions.
Such declines often signal potential market bottoms. pic.twitter.com/OZ3PnDdKKf
— CryptoQuant.com (@cryptoquant_com) July 5, 2024
One significant indicator of capitulation is the decline in Bitcoin’s hashrate, which represents the total computational power securing the Bitcoin network.
The hashrate has experienced a substantial 7.7% decrease, hitting a four-month low of 576 EH/s after reaching a record high on April 27.
The similarity between this decline and the post-FTX collapse conditions in December 2022 suggests a potential market bottom.
It is worth noting that the 7.7% drawdown in hashrate observed recently is comparable to the decline witnessed in late 2022, when Bitcoin’s price bottomed at $15,500 before experiencing a remarkable surge of over 300% in the subsequent 15 months.
The CryptoQuant report also highlights the challenges faced by miners since the halving.
Miners have been
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