The hashrate drawdown for Bitcoin, which measures the decline in the network’s computing power, has reached its lowest levels since December 2022, following the collapse of FTX during the previous bear market. Data from CryptoQuant shows that the True Bitcoin Hashrate Drawdown is currently at -7.6%, indicating a potential bottom for the decentralized asset. This is supported by other metrics such as Bitcoin Exchange Reserve, the Miners Position Index (MPI), and the Bitcoin Miner Reserve, which all suggest low selling pressure.
Recently, there have been indications that miners are starting to capitulate, presenting potential buying opportunities for Bitcoin. Charles Edwards, founder of Capriole, noted that the Bitcoin Hash Ribbons indicator developed by his firm was signaling a buy signal due to the slowdown in network computational power. The Hash Ribbons measure the hashrate by comparing the 60-day moving average against the 30-day average, and when the latter sinks below the former, it indicates a decrease in hash power.
Market analyst Will Woo supported this view by explaining that new highs in the market won’t be reached until weak miners are forced to shut down their operations. Normally, this happens in the weeks following a halving event, but in the current cycle, it seems to be taking longer. Additionally, Bitcoin miner withdrawals have dropped by up to 90% post-halving, suggesting that selling pressure from miners has been reduced and that Bitcoin’s price will continue to rise.
Looking ahead to the April 2024 halving event, Cantor Fitzgerald released a report highlighting the challenges faced by miners due to the decreased block subsidy. The report identified 11 mining companies, including Marathon Digital, Hut8, and Argo Blockchain, as potentially becoming unprofitable due to high mining costs and lower rewards. If the market price of Bitcoin falls to $40,000, some of the largest mining companies in the world may be forced to capitulate, emphasizing the difficulties faced by the mining industry post-halving.
In other news, Bitcoin usage in Senegal has been gaining traction. The African country has been adopting BTC for various reasons, highlighting the growing popularity and utility of the cryptocurrency.