Bitcoin miners are currently confronting a critical phase known as “capitulation” due to shrinking profits amidst a Bitcoin market sell-off.
A recent report from CryptoQuant highlights that metrics tracking miner capitulation are approaching levels last seen after the FTX crash in late 2022, suggesting a potential market bottom for Bitcoin.
Miner capitulation occurs when miners scale back operations or sell mined Bitcoin to sustain operations, generate returns, or hedge Bitcoin exposure.
During the past month, CryptoQuant analysts noted signs of capitulation coinciding with a 13% drop in Bitcoin’s price from $68,791 to $59,603.
Bitcoin Hashrate Declines
A significant indicator of capitulation is the decline in Bitcoin’s hashrate, which represents the total computational power securing the network. The hashrate has fallen by 7.7%, reaching a four-month low of 576 EH/s, echoing conditions post-FTX collapse in December 2022 and suggesting a potential market bottom.
Bitcoin Price Drops Amid Sell-Off
The ongoing sell-off by miners, coupled with actions from Bitcoin whales and national governments, has contributed to Bitcoin’s recent price drop to $53,499, a four-month low. This decline has impacted miner profitability, measured by the “hash price,” which is currently at $0.049 per EH/s.
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