According to market intelligence firm CryptoQuant, Bitcoin miner capitalization indicators are approaching the same level as the post-FTX market bottom in late 2022, suggesting a bottom for BTC..
Miner capitalization is a process where some miners try to survive by scaling back their operations or selling the Bitcoin they mine or hold.
Analysts at CryptoQuant note that numerous signs of capitulation have emerged over the past month as the price of Bitcoin fell 13% from $68,791 to $59,603.
One sign of this is the significant drop in Bitcoin’s hash rate. After reaching its all-time high hashrate on April 27th, the hashrate dropped by 7.7% to a four-month low of 576EH/s.“The capitalization of Bitcoin miners is in line with the levels of December 2022, and the 7.7% decrease in hashrate is similar to the situation after the fall of FTX such a decrease could indicate the bottom of the market.”That’s what it means.
Bitcoin mining hashrate. Source: CryptoQuant
The 7.7% decrease is consistent with the decrease in the output rate at the end of 2022. This coincided with the time when the price of Bitcoin bottomed out at $15,500 and skyrocketed by 300% in the following 15 months that.
Bitcoin miner profit/loss sustainability. Source: CryptoQuant
The CryptoQuant report is based on the Miner Profit/Loss Sustainability Index,For most of the period since half an hour, miners have had “extremely low rewards”.It is also indicated that
Since the halving, miners’ daily income has dropped by 63% compared to when Bitcoin’s block reward and income from transaction fees were high.“Total daily revenue dropped from $79 million on March 6 to $29 million today. In addition, income from trading fees has fallen to just 3.2% of total daily income. This is the lowest level since April 8..
Reduced income is forcing Bitcoin miners to use their holdings to generate income. CryptoQuant isDaily miner outflows reached their highest since May 21, indicating that they may be selling their BTC holdings.points out.
“May (red circle) also saw a spike in outflow, but did not reach extreme levels (twice the 1-year average).
Bitcoin miner daily outflow. Source: CryptoQuant
This sell-off by miners, along with Bitcoin and government whale sales, contributed to the recent Bitcoin price decline, with BTC falling to $53,499 on July 5th.
This decrease also affected the hash price, which measures the profitability of miners per unit of computational power. The average mining revenue per hash is currently $0.049, only slightly higher than the all-time low of $0.045 reached on May 1st.
An earlier report from financial services firm Cantor Fitzgerald indicated that some of the world’s largest mining companies would be forced to capitalize if Bitcoin’s market price fell to $40,000.
The insights and interpretations expressed in this article are those of the author and do not necessarily reflect the views of Cointelegraph. This article does not contain investment advice or recommendations. All investment and trading involves risk and readers should do their own research and make their own decisions.
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