Bitcoin miners are currently facing financial stress due to the fourth halving event, forcing them to sell off their BTC holdings to cover operational costs. Recent on-chain data shows a wave of capitulation from miners similar to December 2022, after the collapse of FTX. The question now is how this previous event could impact the current cycle.
CryptoQuant’s head of research, Julio Moreno, noted that Bitcoin miner capitulation levels are comparable to December 2022, the bottom of the last cycle. During that time, the collapse of FTX triggered panic and sell-offs, resulting in a sharp decline in the price of Bitcoin. The Network True Hashrate Drawdown metric is currently at -7.6%, reflecting miners’ struggles to maintain operations financially.
The significant miner capitulation can lead to increased selling pressure, potentially driving down the price of Bitcoin. However, historical data shows that market recoveries often follow periods of miner capitulation. The Bitcoin market reached the cycle bottom the last time the Network True Hashrate Drawdown was at this level, suggesting a potential price rebound soon.
As of now, the price of BTC is around $60,889, with a slight increase in the past 24 hours but a decline of over 5% on the weekly timeframe. Despite the current market conditions, there is potential for a price rebound, as seen in past cycles. Investors should keep an eye on the Network True Hashrate Drawdown metric and monitor for signs of a market recovery.
In summary, the recent wave of miner capitulation in the Bitcoin market mirrors events from December 2022, following the collapse of FTX. While this capitulation may lead to increased selling pressure, historical data suggests that it could precede a market recovery. As the Network True Hashrate Drawdown hits levels similar to the previous cycle bottom, Bitcoin may be poised for a price rebound in the near future. Investors should stay informed and monitor on-chain data for signals of a potential market turnaround.
