Bitcoin miner capitulation metrics are nearing the same level as they were after the FTX crash in late 2022, suggesting a possible bottom for BTC, according to market intelligence firm CryptoQuant.
Miner capitulation is when miners scale back their operations or sell some of their mined Bitcoin and reserves to survive, earn yield, or hedge their Bitcoin exposure.
Over the last month, CryptoQuant analysts have identified several signs of capitulation, coinciding with a 13% drop in Bitcoin’s price from $68,791 to $59,603.
One of these signs is a significant decrease in Bitcoin’s hashrate, which has fallen by 7.7% to reach a four-month low of 576 EH/s after reaching a record high on April 27.
This 7.7% decline is similar to the drop in hashrate in late 2022 when Bitcoin’s price hit a low of $15,500 before increasing by more than 300% over the next 15 months.
The report by CryptoQuant also pointed out that miners have been “extremely underpaid” since the halving, as indicated by the miner profit/loss sustainability indicator.
As a result, miners have experienced a 63% decrease in daily revenues since the halving, forcing them to use their reserves to earn yield. The report suggested that daily miner outflows have surged to the highest volume since May 21, indicating that miners may be selling their BTC reserves.
This sell-off, combined with sales from Bitcoin whales and national governments, has contributed to the recent price drop of Bitcoin, which fell to a four-month low of $53,499 on July 5.
The decline has also affected Bitcoin’s “hash price,” which measures miner profitability per unit of computational power. Currently, the average mining revenue by hash is $0.049 per EH/s, just above the all-time low of $0.045 reached on May 1.
According to a previous report by financial services firm Cantor Fitzgerald, some of the world’s largest mining companies would be forced to capitulate if the market price of Bitcoin drops to $40,000, highlighting the mining industry’s predicament.
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