The Bitcoin hashrate drawdown, a data point showcasing fluctuations in Bitcoin’s network computing power, has slumped to levels last observed in December 2022, during the downturn of FTX and the previous bear market. This drawdown measure presently stands at -7.6% as per CryptoQuant, indicating a potential low for the asset’s value.
This potential market low is further substantiated by other metrics, including the Bitcoin Exchange Reserve, Miner’s Position Index (MPI), and Bitcoin Miner Reserve, all of which suggest a decrease in selling pressure.
Over the past few weeks, several indicators have hinted at potential capitulation from miners, alluding to potential purchase opportunities for Bitcoin. Charles Edwards, founder of crypto hedge fund Capriole, indicated that the Bitcoin hash ribbons metric developed by Capriole implied a buying signal due to a relative decrease in network computational power.
The hash ribbons’ analytical method compares the 60-day moving average of the Bitcoin hashrate to a 30-day average. A decrease in the 30-day average relative to the 60-day average signifies a decrease in hash power. Market analyst Will Woo concurred with Edwards, stating that the market will not reach new peaks until underperforming miners are compelled to end their operations.
In recent news, Bitcoin miner withdrawals dropped by as much as 90% after the halving, implying that miners’ selling pressure has eased and that the Bitcoin price may continue to rise.
In anticipation of the forthcoming halving event in April 2024, financial services firm Cantor Fitzgerald outlined the issues faced by miners due to reduced block subsidies. Their report warned that if Bitcoin’s market price falls to $40,000, several large mining corporations might have to capitulate due to their high costs and lower rewards.