Bitcoin miners are facing financial stress following the fourth halving event, leading to a mass sell-off of BTC holdings to cover operational costs. The on-chain data shows a wave of capitulation from miners reminiscent of December 2022, after the FTX collapse. This raises questions about the impact on the current cycle and whether BTC is ready to resume its bull run.
Julio Moreno, head of research at CryptoQuant, revealed that Bitcoin miner capitulation levels are similar to December 2022, which marked the bottom of the previous cycle post-FTX collapse. The Network True Hashrate Drawdown, a metric reflecting miners’ struggles to maintain operations, is currently at -7.6%, mirroring the situation in 2022.
The significant drawdown in hash rate and miner capitulation can lead to increased selling pressure, potentially driving Bitcoin’s price down. However, historical data suggests that periods of miner capitulation precede market recoveries. The market bottomed out in December 2022 when the Network True Hashrate Drawdown was at a similar level, indicating a possible price rebound for BTC.
As of now, the price of BTC is around $60,889 with a slight increase in the past 24 hours but a 5% decline over the week. The chart shows BTC on the verge of $62,000, indicating a volatile market.
Overall, the current situation with Bitcoin miners and the potential impact on the market highlights the cyclical nature of the cryptocurrency market. While miner capitulation can create short-term selling pressure, it may also pave the way for a market recovery in the near future. Investors and traders should closely monitor these developments to make informed decisions in a volatile market environment.
