According to CryptoQuant, a market intelligence firm, metrics indicating Bitcoin miner capitulation are nearing levels last seen during the market recovery after the FTX crash in late 2022, suggesting a potential turning point for BTC.
Miner capitulation involves miners scaling back operations or selling portions of their mined Bitcoin to manage costs, generate yield, or hedge against Bitcoin exposure. Over the past month, CryptoQuant analysts have observed several signs of capitulation coinciding with Bitcoin’s price drop from $68,791 to $59,603, a decline of 13%.
One significant indicator is the marked decrease in Bitcoin’s hashrate, which represents the total computational power securing the Bitcoin network. The hashrate dropped by 7.7% to reach its lowest in four months at 576 EH/s, following a peak in April.
Source: CryptoQuant
Interestingly, this 7.7% decline mirrors a similar downturn in late 2022, when Bitcoin’s price hit a low of $15,500 before staging a remarkable recovery, surging more than 300% over the subsequent 15 months. The CryptoQuant report also highlighted that miners have been struggling financially since the halving event, as indicated by the miner profit/loss sustainability indicator.
Source: CryptoQuant
Since the halving, miners have experienced a 63% drop in daily revenues, stemming from reduced block rewards and transaction fees. Consequently, miners have resorted to using their reserves to generate income. CryptoQuant observed a notable increase in daily miner outflows, the highest since May 21, suggesting heightened BTC reserve liquidation.
Source: CryptoQuant
This sell-off by miners, coupled with sales by Bitcoin whales and governmental entities, has contributed to the recent decline in Bitcoin’s price, which dipped to $53,499, the lowest in four months as of July 5. This downturn has also impacted Bitcoin’s “hash price,” a metric indicating miner profitability per unit of computational power. Currently, the average mining revenue per hash stands at $0.049 per EH/s, slightly above the all-time low of $0.045 recorded on May 1.
A previous report by Cantor Fitzgerald, a financial services firm, warned that major mining companies could face capitulation if Bitcoin’s market price drops to $40,000, underscoring the challenges within the mining sector.
It’s important to note that this article does not provide investment advice. All investment and trading decisions involve risks, and readers are encouraged to conduct their own research before making any decisions.