- The Bitcoin network is currently experiencing signs of miner capitulation, sparking concerns and discussions among financial analysts and crypto enthusiasts.
- Historically, miner capitulation has often coincided with the bottoming out of Bitcoin prices, potentially setting the stage for a future uptrend.
- According to CryptoQuant, less efficient miners have ceased operations due to declining profitability, highlighted by a 7.7% drop in the network hash rate since the recent halving.
Bitcoin network shows signs of miner capitulation, a historical indicator of potential price bottoms and upcoming uptrends.
Bitcoin Miner Capitulation Indicators
Since the latest halving event, the Bitcoin network hash rate has experienced a marked decline of 7.7% from its high on April 27. CryptoQuant reports that less efficient miners have suspended their operations due to negative profitability. Their sustainability indicator reveals that miners have faced significant underpayment since April 20, a day after the 2024 Bitcoin halving.
Decline in Daily Revenues and Mining Profits
Daily mining revenues have plunged dramatically, falling by 63% from $79 million on March 6 to the current $29 million, with transaction fees contributing just 3.2% to total revenue, the lowest since April 8. Moreover, the average mining revenue per hash, or hash price, remains near all-time lows at $0.049 per EH/s, hovering slightly above the record low of $0.045 reached on May 1. This has resulted in miners transferring Bitcoin out of their wallets at unprecedented rates, with daily outflows hitting their highest since May 21, potentially indicating increased selling activity.
Historical Patterns and Predictive Insights
This period of miner capitulation echoes the 7.7% hash rate drawdown observed in December 2022, a time that marked the bottom cycle after the FTX collapse. Historically, such significant declines in hash rate have been linked to price-bottom conditions, suggesting a potential opportunity for an upward price movement.
Potential for a Bitcoin Rebound
Further corroborating the price-bottom theory is Bitcoin’s trading discount on Coinbase. This discount, historically an indicator of upcoming price increases, might suggest that Bitcoin is poised for a substantial rally. David Lawant, Falcon’s head of research, recently discussed this in a post on X, questioning whether it is “always darkest before the dawn.” He pointed out that the last significant Coinbase premium discount preceded a massive rally from October 2023 to March 2024. Thus, the current discount could foretell a similar bullish trend.
Conclusion
In summary, the current signs of Bitcoin miner capitulation reflect historical patterns that have often marked price bottoms, potentially indicating an upcoming uptrend. The significant decline in network hash rate, daily revenues, and increased miner outflows, combined with the trading discount on Coinbase, provide strong signals for a possible imminent rally. As the crypto market remains vigilant, Bitcoin’s future movement will be closely watched by investors and analysts alike.
