The Bitcoin network’s computing power, known as the hashrate drawdown, has reached its lowest point since December 2022, which coincided with the collapse of FTX during the previous bear market. This significant drop in the hashrate drawdown suggests a potential bottom for the price of Bitcoin.
Data from CryptoQuant shows that the True Bitcoin Hashrate Drawdown currently stands at -7.6%. Other metrics such as Bitcoin Exchange Reserve, the Miners Position Index (MPI), and the Bitcoin Miner Reserve also indicate low selling pressure, further supporting the case for a market bottom.
In recent weeks, indicators have pointed to miners capitulating, presenting potential buying opportunities for Bitcoin. Charles Edwards, founder of Capriole, highlighted the buy signal from the Bitcoin Hash Ribbons indicator developed by his firm. This indicator compares the 60-day moving average of the Bitcoin hashrate with a 30-day average and detects a decrease in hash power when the 30-day average falls below the 60-day average.
Market analyst Will Woo echoed this sentiment, stating that weak miners need to shut down their operations for the market to reach new highs. Typically, this occurs in the weeks following a halving event, but it seems to be prolonged in the current cycle. Recent data shows a significant drop in Bitcoin miner withdrawals post-halving, indicating reduced selling pressure and a potential rise in Bitcoin’s price.
Looking ahead to the April 2024 halving event, Cantor Fitzgerald released a report highlighting the challenges miners will face due to the reduced block subsidy. The report identified several mining companies, including Marathon Digital, Hut8, and Argo Blockchain, that could become unprofitable due to high mining costs and lower rewards. If the market price of Bitcoin drops to $40,000, some of the largest mining companies worldwide may be forced to capitulate, emphasizing the difficulties faced by the mining industry post-halving.
In other news, Bitcoin adoption in Senegal has been on the rise. The African country has embraced BTC for various reasons, showcasing its potential as a digital currency.