Bitcoin's price currently hovers a little below $ 21.000 as the asset is struggling for a rebound. Interestingly, reports revealed that the digital asset's effort to get back to the top is largely offset by the occurrence of the miners' "capitulation event". Several reports have revealed that the miners are barely making a profit, forcing them to sell more coins to cover operating costs. Arcane research recently reported that a significant amount of Bitcoin is currently leaving miners' wallets.
In the first four months of 2022, public mining companies sold 30% of their bitcoin production. The collapse in the profitability of mining forced these miners to increase the sales rate to more than 100% of their production in May.
Additionally, Bitfarms, one of the leading Bitcoin miners, has sold 3.000 Bitcoins for $ 62 million in the past two weeks to the current quotation. This is to increase its liquidity. The miners' recent "capitulation event" was confirmed by Coin Metrics, which estimated that miners sold more than $ 500 million worth of Bitcoin this month.
Bitcoin Hash Ribbons has also switched to capitulation, indicating that some miners have stopped mining because block rewards fail to make up for costs. According to Julio Moreno, senior analyst at on-chain data firm CryptoQuant, this indicates that the Bitcoin bottom may have arrived. This is based on historical models showing that capitulation events precede the final phase of the Bitcoin sell-off.
Our data shows that a miner capitulation event has occurred, which has typically preceded market bottoms in previous cycles.
Are Buyers Still Heading the Bitcoin Market?
Regardless of the situation, most Bitcoin miners remain active. Network fundamentals were observed to have dropped slightly from the all-time high of 30 trillion. According to CryptoQuant CEO Ki-Young Ju, this is the time to decide whether to stay or leave. He also hailed the arrival of the whales by stating that the average outflow from Coinbase has reached a 9-year high. The same can be said of the average inflows.
Trader and analyst Rekt Capital, however, noted buyer dominance by stating that bears still have direct control of the market.
The current BTC buying volume after the extreme sales surge is still below the bear market buyer's follow-through volume levels of 2018 to the 200-week MA. Not to mention the March 2020 follow-through.
The experts also explain that the decrease in the hash rate causes the network to reduce the difficulty of extraction. However, the network can reach equilibrium with the miners only after a certain time, as the adjustment of the difficulty occurs every two weeks. The last time this happened was on June 22nd. This, coupled with the forced sale of miners, could negatively impact an eventual recovery in Bitcoin.