Bitcoin miners have been selling relatively aggressively in the aftermath of the collapse of crypto exchange FTX and the subsequent massive selling pressure seen for Bitcoin (BTC).
Combined with the hash rate decline and bearish cross on the hash ribbon, this indicates that the industry is in a “period of miner capitulation.” says Will Clemente, Co-Founder of digital asset research firm Reflexivity Research.
“We are potentially entering into a double dip miner capitulatory period. Hash ribbons have just initiated a bearish cross, historically this has been a leading indicator of miner capitulation,” added Clemente in another Tweet.
Bitcoin miner capitulation occurs when the Bitcoin price falls, making it difficult for some miners to hold the BTC profitably. As a result, they are compelled to sell and leave the network.
Bitcoin miners’ revenue has dropped to two-year lows as a result of poor market results and rising computational demand due to increasing network difficulty.
On a 7-day moving average, the BTC hash rate is 13.7% lower than its all-time high. The next Bitcoin mining difficulty adjustment will be -9% in a week. This clearly indicates an early stage of Bitcoin miner capitulation.
According to Glassnode, The industry remains under “immense financial stress,”. According to Glassnode and CryptoSlate’s research, miners distribute approximately 135% of mined coins.
In our latest report with @CryptoSlate, we analyse the #Bitcoin mining sector, and how the industry is under immense financial stress
— glassnode (@glassnode) November 28, 2022
What we find is that $BTC miners are distributing around 135% of mined coins
This means miners are dipping into their 78k $BTC strong treasuries https://t.co/cRuHUVRsjt pic.twitter.com/fvso2v6Lkr
A value greater than 100% indicates that miners are selling more than they have recently issued. According to the data, Bitcoin miners are raiding their treasuries. By selling their reserves, they are attempting to cover rising electricity costs, which effectively reduce mining operations’ profitability.
The chart shows that Bitcoin miners have been aggressively selling in the last month. This, combined with the failure of the crypto exchange FTX, has increased selling pressure on the BTC price.
A current drop in the Bitcoin hash rate over the last month has allowed miners to recoup their losses. Total Bitcoin mining revenue, including block rewards and transaction fees, fell to $11.67 million in US dollars, a figure last seen on November 2, 2020, when Bitcoin’s trading price was around $13,500.
