According to CryptoQuant, a market intelligence firm, metrics indicating Bitcoin miner capitulation are nearing levels last seen during the market’s low after the FTX crash in late 2022, potentially signaling a bottom for BTC.
Miner capitulation involves miners scaling back operations or selling a portion of their Bitcoin holdings to manage costs, earn yield, or hedge their exposure to Bitcoin. CryptoQuant analysts have identified several signs of capitulation in recent weeks, coinciding with Bitcoin’s price decline from $68,791 to $59,603, a drop of 13%.
One significant indicator is the substantial decrease in Bitcoin’s hashrate, the total computing power securing the Bitcoin network, which has fallen by 7.7% to reach its lowest level in four months at 576 EH/s, following a peak on April 27.
Notably, this 7.7% decline mirrors a similar drop in late 2022, preceding a significant Bitcoin price increase of over 300% in the subsequent 15 months. The report from CryptoQuant also highlights that miners have been under severe financial strain since the halving event, with profitability indicators showing significant losses.
As a result, daily revenues for miners have dropped by 63% since the halving, driven by lower block rewards and transaction fees. This revenue decline has forced miners to utilize their reserves to generate income, evidenced by a sharp increase in daily outflows, reaching levels not seen since May 21.
This sell-off by miners, in addition to sales from large Bitcoin holders and governmental bodies, has contributed to the recent decline in Bitcoin’s price, which recently hit a four-month low of $53,499 on July 5.
The downturn has also impacted Bitcoin’s “hash price,” which measures miner profitability per unit of computing power. Currently, the average mining revenue per hash stands at $0.049 per EH/s, slightly above the all-time low of $0.045 recorded on May 1.
Financial services firm Cantor Fitzgerald previously reported that major mining companies could face capitulation if Bitcoin’s market price drops to $40,000, underscoring the challenges within the mining sector.
It is essential to note that this article does not offer investment advice. All investment decisions involve risk, and readers should conduct their own research before making any decisions.