The Bitcoin miner capitulation might be a good thing for BTC
The capitulation of Bitcoin miners scaling back their operations was seen reaching levels akin to those of December 2022. CryptoQuant's research chief, Julio Moreno, highlighted in a message on X that the decrease in hash rate hit 7.6%.
It's crucial to understand that the dip in hash rate does not directly cause a slump in prices. Instead, the impact of the halving, the overall mood in the market, and miners' financial needs to update their hardware to stay ahead play significant roles in Bitcoin's drop from $71k to $60k in June.
The phenomena of Bitcoin miners scaling back are closely linked with the network's hash rate. The hash rate measures the total computational effort miners contribute, which was recorded at 537.15 EH/s currently.
An examination into the miners’ profit/loss sustainability demonstrated that in early June, miners received excessive payments. However, their compensation plunged into the excessively underpaid range just two weeks later, as Bitcoin's value fell by 16.2% within that timeframe.
Currently, the sustainability indicator is transitioning from being exceedingly underpaid to reasonably compensated. This shift in the sustainability metric does not instantly suggest a market floor has been reached, but it does hint that miners may hold off on selling, awaiting more favorable market conditions.
The Miners’ Position Index, which compares the daily average miners’ USD outflows over 365 days to the present outflows, provides insights into miner activity. This ratio's evolution indicates whether miners are increasing or decreasing their Bitcoin transfers to exchanges.
Analysis reveals that miner outflows were notably high in February and March, then slightly decreased in April and May, and significantly reduced in June, indicating a reduction in exchanges’ deposits.
Ultimately, the reduction in hash rate underscores the concept of miner withdrawal. According to the MPI analysis, miners have been liquidating Bitcoin at a reduced rate recently, suggesting optimistic prospects for the long-term.
