Bitcoins Network Processing Power Retreats to the Depths of December 2022

The Bitcoin network’s hashrate drawdown has reached levels not seen since December 2022, following the collapse of FTX during the previous bear market. CryptoQuant data shows that the True Bitcoin Hashrate Drawdown currently stands at -7.6%, indicating a potential price bottom for the decentralized asset. Other metrics such as Bitcoin Exchange Reserve, the Miners Position Index (MPI), and the Bitcoin Miner Reserve also suggest low selling pressure. This supports the case for a market bottom.
Miners’ capitulation is evident in various indicators, signaling potential buying opportunities for Bitcoin. Charles Edwards, founder of crypto hedge fund Capriole, pointed out that the Bitcoin Hash Ribbons indicator, developed by his firm, was flashing a buy signal, reflecting the slowdown in network computational power. Hash ribbons compare the 60-day moving average of the Bitcoin hashrate with a 30-day average to measure the network’s hashrate. When the 30-day average falls below the 60-day average, it indicates a decrease in hash power. Market analyst Will Woo also noted that weak miners need to shutter their operations before the market can reach new highs.
Bitcoin miner withdrawals have dropped significantly since the halving, minimizing selling pressure from miners. This indicates that Bitcoin’s price will likely continue to rise. However, the post-halving period presents challenges for miners. A report by Cantor Fitzgerald highlighted the difficulties mining companies face following the decreased block subsidy. It identified 11 mining companies that may become unprofitable due to high mining costs and lower rewards if the market price of Bitcoin drops to $40,000. This emphasizes the predicament of the mining industry post-halving.