Bitcoin Miner Capitulation At December 2022 Levels – What Happened Last Time?

It’s no secret that Bitcoin miners are currently facing severe financial stress, especially after the conclusion of the fourth half event. As a result, these important network participants are forced to withdraw their BTC assets to reduce the increasing operational costs.

It is interesting that the latest on-chain data shows that the Bitcoin market is facing a wave of miners’ arrests reminiscent of December 2022, about a month after the fall of FTX. The question now is – what happened last and how will it affect the current cycle?

Is BTC Ready To Resume Its Bull Run?

In a recent post on X, the head of CryptoQuant research Julio Moreno revealed that Bitcoin capitulation of miners reached levels comparable to December 2022. December 2022 also represents the bottom of the previous cycle after the fall of FTX.

The collapse of the exchange led by Sam Bankman-Fried marked a low point in the crypto industry, causing widespread panic and selling. Ultimately, this huge selling pressure caused a huge drop in the price of Bitcoin.

Meanwhile, the arrest among Bitcoin miners was seen by a 7.6% drop in the Network True Hashrate. According to Julio Moreno at X, the Network True Hashrate Drawdown is also currently at 7.6%.

A chart showing BTC's Network True Hashrate Drawdown and price | Source: jjcmoreno/X

The Network True Hashrate Drawdown metric calculates the decrease in computing power dedicated to Bitcoin mining, reflecting miners’ struggles to maintain operations in a tight financial environment. Naturally, a significant drop in Network True Hashrate and related miner participation has several potential impacts on Bitcoin’s value.

As seen in the past few weeks, this can lead to increased selling pressure, as miners look to sell their products BTC market capitalization. This could put serious downward pressure on the price of Bitcoin, driving its value to lower levels.

At the same time, historically significant mining appointments precede market discovery. In addition, as highlighted in the post, the Bitcoin market reached the bottom of the last cycle (December 2022) Network True Hashrate Drawdown was at this point. This suggests that BTC could start a price reversal in the near future.

Bitcoin Price At A Glance

As of this writing, the price of BTC is around $60,889, which represents an increase of 0.2% in the last 24 hours. The main cryptocurrency is still heavily focused on the weekly timeframe, with a drop of more than 5% over the past week.

The price of BTC on the verge of $62,000 on the daily timeframe | Source: BTCUSDT chart on TradingView

Featured image from iStock, chart from TradingView