The Bitcoin hashrate drawdown, a key metric measuring the decline in the BTC network’s computational power, has plummeted to levels last seen in December 2022. However, the situation around the FTX also falls under the field. Hence, it is another convincing reason for the bear market to dominate.
According to CryptoQuant, the True Bitcoin Hashrate Drawdown is -7.6%. This crucial figure shows a Bitcoin price bottom chance, which implies a stabilizing market. Additional metrics, such as the Bitcoin Exchange Reserve, the Miners Position Index (MPI), and the Bitcoin Miner Reserve, specify a reduced selling pressure from miners and, thus, a less volatile market environment.
Miner Capitulation and Market Dynamics
In the past few weeks, there have been signs of miner capitulation, where miners start selling off their holdings, potentially creating buying opportunities for investors. Charles Edwards, the founder of Capriole, emphasized that the Bitcoin Hash Ribbons indicator, developed by his company, produces a buying signal.
This indicator compares the 60-day and 30-day moving averages of the Bitcoin hashrate. If the 30-day average is less than the 60-day average, then one major consequence is that mining activities will be reduced.
Will Woo reported that the market will not reach a new top point until the weaker miners leave the market. This flow, which is typically observed post-halving, seems to be elongating in the present cycle. Just recently, the amount of withdrawals by Bitcoin miners from the system has fallen by up to 90% post-halving, which indicates very low pressure for sellers and suggests a bullish move in the price of Bitcoin.
Miners prepare for decreased block subsidies as the April 2024 halving event approaches. A report by Cantor Fitzgerald identified 11 mining companies, including Marathon Digital and Hut8, that may have difficulty staying in business because of very high operational costs and lower rewards. If the price of BTC were to sink to around $40,000, a host of them would meet huge financial difficulties, depicting the unconvincing status of the mining sector after halving occurred.
The Bitcoin hashrate has been fluctuating a lot, and recently, it was 566 EH/s on average for 7 days, which means miners are working even harder and there’s more competition between them now.
This surge followed a reduction in mining difficulty, offering miners a temporary respite and faster block rewards. However, as the difficulty adjusts again, this could lead to another pullback in the hashrate as miners reassess profitability.
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