The Bitcoin hashrate decline, a measure of the relative computing power of the Bitcoin network, has reached its lowest point since December 2022, which coincided with the collapse of FTX during the previous bear market. Data from CryptoQuant shows that the True Bitcoin Hashrate Drawdown currently stands at -7.6%, indicating a potential bottom for the decentralized asset.
This belief in a market bottom is supported by other metrics such as Bitcoin Exchange Reserve, the Miners Position Index (MPI), and the Bitcoin Miner Reserve, all of which suggest a decrease in selling pressure.
In recent weeks, various indicators have suggested that miners are starting to give up, presenting potential buying opportunities for Bitcoin. At the start of June, Charles Edwards, the founder of crypto hedge fund Capriole, pointed out that the Bitcoin Hash Ribbons indicator developed by his firm was signaling a buy indication due to the slowdown in network computational power.
Hash ribbons measure the network’s hashrate by comparing the 60-day moving average against the 30-day average. When the 30-day average falls below the 60-day average, it indicates a relative decrease in hash power.
Market analyst Will Woo supported Edwards’ statement by explaining that the market won’t reach new highs until weak miners are forced to close their operations. This typically happens in the weeks following a halving event, but it appears to be taking longer during the current cycle.
More recently, Bitcoin miner withdrawals decreased by up to 90% after the halving, suggesting that selling pressure from miners has been minimized and that Bitcoin’s price will continue to rise.
Looking ahead to the April 2024 halving event, Cantor Fitzgerald released a report highlighting the challenges that miners would face due to the reduced block subsidy. The report identified 11 mining companies, including Marathon Digital, Hut8, and Argo Blockchain, that could potentially become unprofitable due to high mining costs and lower rewards.
If the market price of Bitcoin drops to $40,000, as stated in the report, some of the world’s largest mining companies would be forced to give up, underscoring the difficulties faced by the mining industry after the halving.
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