Bitcoin (BTC) has been on a downward trend for more than two weeks and is currently trading 13.8% below its all-time high of $73,835, which was reached on March 14. Analysts believe that in order to end the downtrend, Bitcoin must recover its hashrate and shake off “weak hands.”
Independent analyst Willy Woo pointed out that Bitcoin’s price will only see a recovery when “weak miners die” and the hashrate bounces back. He stated, “This one is for the record books as it’s taking a lot of time for miner capitulation post-halving,” in a June 21 post on the X social media platform.
Miner capitulation is a theory that suggests that miners will shut down their hardware and sell their coins if Bitcoin’s price falls below a certain level and mining becomes unprofitable. According to Woo, when Bitcoin “sheds weak hands,” it means that “inefficient miners running old hardware and high costs go into bankruptcy, while others are forced to upgrade to more efficient hardware” due to their halved revenues. Both scenarios force miners to sell their BTC to cover losses or upgrade hardware.
Woo noted that the capitulation is taking longer during the current cycle, likely due to increased profits. He shared a graph showing that the hashrate recovery is taking longer compared to previous cycles.
In contrast, the hashrate took 24 days to recover during the 2017 cycle and only 8 days in 2020. The Bitcoin hashrate refers to the number of attempts made per second to solve the mathematical puzzle that validates Bitcoin transactions. When the Bitcoin hashrate increases, more computing power is used, leading to higher energy costs and longer verification and transaction times.
Fellow analyst Ali Martinez declared in a June 15 post on X that “Bitcoin’s average mining cost is currently at $86,668.” Also expressing an opinion on when the Bitcoin price is likely to end the downtrend is fellow analyst Mr. Anderson, who said it will take a “shake out,” which occurs “when price drops sharply, causing less committed traders to sell.” He explained, “The goal is to trigger panic and increased selling,” in a June 18 X post.
It is important to note that this article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.