Key Points
- The Bitcoin miner capitulation might ease selling pressure on Bitcoin.
- Metrics suggest a bullish trajectory for Bitcoin prices in the upcoming weeks.
The concept of Bitcoin miner capitulation is gaining momentum and is reminiscent of the scenario in December 2022.
Julio Moreno, CryptoQuant’s head of research, revealed a 7.6% hash rate drawdown in a post on X (previously Twitter).
Hash Rate and Price Fluctuations
It’s important to note that the drop in Bitcoin prices is not a direct result of the hash rate plunge. Instead, factors such as the halving effects, market sentiment, and miner cash requirements for equipment upgrades contribute to the price fluctuations.
For instance, these factors led to Bitcoin’s drop from $71k to $60k in June.
The hash rate, which measures the computational power of Bitcoin miners, was at 537.15 EH/s at the time of reporting.
Miner Capitulation: A Positive Sign?
The 7.6% hash rate drop mirrors the decrease that followed the FTX exchange collapse in November 2022 and the subsequent slump in market sentiment in December 2022.
Data from the miner profit/loss sustainability chart indicates that miners were significantly overpaid in early June. Conversely, two weeks later, they were heavily underpaid as Bitcoin prices had fallen by 16.2%.
At the moment, the sustainability metric is transitioning from extremely underpaid to fairly paid.
This shift does not necessarily signify a local bottom, but it suggests that miners might hold off on selling until prices improve.
Examining Miner Outflows
The Miners’ Position Index calculates a ratio using the 365-day moving average of the miners’ USD outflows and the current outflows.
This ratio provides insights into miner behavior, particularly whether they are sending more or less Bitcoin to exchanges.
Data shows that miner outflows were substantial in February and March, decreased slightly in April and May, and were relatively low in June. Thus, miners are sending fewer coins than usual to exchanges.
In conclusion, the hash rate drop supports the notion of miner capitulation. The MPI data suggests that miners have been liquidating fewer Bitcoin than usual, which could be a bullish sign in the long term.
