Historic Bitcoin (BTC) Miner Capitulation in Whole Effect – For How Long?November 29, 2022
The FTX exchange’s fall is bringing historical events within the Bitcoin ecosystem. Yesterday’s on-chain stats confirmed BTC miner capitulation second wave in one cycle. Historically, cryptocurrency miners have had an enormous effect on BTC’s price.
The foreshadowed miner capitulation will translate to increased selling momentum on Bitcoin’s price. Remember, BTC is witnessing a historically ugly November, losing 21%. On-chain data indicates that the 2nd miner capitulation wave has begun, indicating more pain for BTC. Dylan LeClair, a BTC analyst, stated that the BTC hash rate started to tilt.
BTC Miners Underwater
The seven-day MA hash rate remains 13.7% down from its ATH. Analysts expect mining difficulty to adjust by around -9% per week. That could alleviate some pressure on miners in the near term. However, miner margins have been highly squeezed since June – the initial capitulation in this cycle.
Despite that, the hash rate soared to an ATH until lately. Thus, the FTX-driven price crash and surging mining difficulty dragged the hash price to the lowest mark since 2020. Charles Edwards of Capriole Investments stated that (yesterday) hash ribbons displayed the beginning of capitulation.
The $100B FTX scam and the associated collapse had BTC miners struggling and going broke. Edwards added that the hash rate maintained a downtrend. Meanwhile, the BTC miner position change shows miners have massively sold over the previous month. Combined with the hash band bearish cross (today) and hash rate slump confirms an underway miner capitulation, according to Reflexivity Research’s Will Clemente.
How Long Will This Capitulation Last?
First and foremost, miner capitulation represents the final phase of a BTC bear market. The 2018 cycle saw Bitcoin hashrate extending upsides as the price hit $6KK until the last miner capitulation emerged at $3K.
In the ongoing cycle, miners saw a capitulation event in June. Over the past two weeks, they trimmed their balances by 4,000 BTC (approximately $68 million). Before that, they started accumulating in September 2022, predicting that the market had bottomed.
Nevertheless, they are experiencing severe punishment as their bets were wrong. Miner capitulation has historically lasted for 48 days. That means the miner selling momentum could end by mid-January next year.
Nonetheless, the latest capitulation ended after two months – on 18 August. The end formed the 3rd largest capitulation ever. Thus, BTC bulls should be alert in December & January while watching Bitcoin miner behavior. Bitcoin traded at $16,481 during this writing, following a slight upsurge.