It’s no secret that Bitcoin miners are currently facing significant financial stress, especially following the completion of the fourth halving event. As a result, these vital network participants are being forced to divest their BTC holdings to offset rising operating costs.
Interestingly, the latest on-chain data shows that the Bitcoin market is experiencing a wave of miner capitulation reminiscent of December 2022, barely a month after the FTX collapse. The question now is: what happened last time and how could it impact the current cycle?
Is BTC Ready to Resume the Bull Run?
In a recent message on XJulio Moreno, head of research at CryptoQuant, revealed that the capitulation of Bitcoin miners has reached levels comparable to December 2022. December 2022 also marked the low point of the previous cycle following the collapse of FTX.
The fall of the Sam Bankman-Fried-led exchange marked a low point for the crypto industry, leading to widespread panic and sell-offs. Ultimately, this massive selling pressure caused Bitcoin’s price to plummet.
At the time, the capitulation among Bitcoin miners was marked by a 7.6% drawdown in the Network True Hashrate. According to Julio Moreno’s post on X, the Network True Hashrate Drawdown currently stands at -7.6% as well.
A chart showing BTC's Network True Hashrate Drawdown and price | Source: jjcmoreno/X
The Network True Hashrate Drawdown metric calculates the reduction in computing power dedicated to mining Bitcoin, which reflects the struggle of miners to maintain operations in a tight financial situation. Naturally, the significant drop in the Network True Hashrate and the associated capitulation of miners have several potential implications for the Bitcoin price.
As recent weeks have shown, these can lead to an increase in selling pressure as miners look to sell their shares. BTC holdings. This could put serious downward pressure on Bitcoin’s price, pushing its value to lower levels.
At the same time, historically, periods of significant miner capitulation have preceded market recovery. Furthermore, as highlighted in the post, the last time (December 2022) the Bitcoin market reached this point. This suggests that BTC could really be ready for a price recovery soon.
Bitcoin Price At A Glance
At the time of writing, the price of BTC stands at around $60,889, reflecting a 0.2% increase over the past 24 hours. The leading cryptocurrency is still deep in the red on the weekly timeframe, down more than 5% over the past week.
The price of BTC on the verge of $62,000 on the daily timeframe | Source: BTCUSDT chart on TradingView
Main image from iStock, chart from TradingView