Bitcoin (BTC) has been experiencing a prolonged downtrend for more than two weeks, currently trading at 13.8% below its all-time high of $73,835 reached on March14. Analysts believe that for BTC to reverse this trend, it needs to recover hashrate and shake off “weak hands.”
Independent analyst Willy Woo emphasized that Bitcoin price would only rebound when “weak miners die” and the hashrate recovers. In a post on June21, he mentioned that the current phase of miner capitulation is taking longer than usual after the halving event. Miner capitulation refers to miners off their hardware and selling their coins if Bitcoin’s price falls below a certain level where becomes unprofitable.
When weak hands are shed, it signifies inefficient miners with outdated hardware and high going bankrupt or being forced to upgrade to more efficient hardware due to their reduced. In both cases, miners have to sell their BTC in order to cover losses or fund hardware upgrades.
Woo also pointed out that cycle of capitulation is taking longer possibly due to profit boosts in comparison with previous cycles. He shared a graph illustrating the extended recovery period for the hashrate compared to past cycles.
In contrast, during the 2017 cycle, it took 24 days for the hashrate to recover while in 2020 it only took 8 days.
The Bitcoin hashrate represents the number of attempts made per second by miners in solving mathematical puzzles required for validating transactions. As the hashrate increases, more computing power is utilized leading to higher energy costs as well as longer verification and transaction times.
to fellow analyst Ali Martinez, Bitcoin’s average mining cost presently stands at $86, as stated in a post on June 15.
Another analyst named Mr. Anderson believes that this downtrend will require a “shake out,” which occurs when prices drop sharply leading committed traders panic-selling their positions. The goal here is triggering panic and increased selling activityIt is important to note that this article does not provide investment advice or recommendations. Readers should thorough research before making any investment decisions as every investment move involves risk.