Determining a market bottom requires a lot of guesswork. Bitcoin’s recent volatility has been caused by a variety of factors, from geopolitical uncertainty and local regulation to the internal implosion of the cryptocurrency market.
Miners have historically been one of the most reliable harbingers of Bitcoin’s performance.
Bitcoin miners form the foundation of the cryptocurrency market and create strong resistance levels that reduce volatility. As one of the largest holders of BTC, miners can change the market by holding their tokens and liquidating them.
Analyzing the state of the market requires analyzing the state of Bitcoin miners.
As previously reported by CryptoSlate, some of the most reliable indicators of miner health are hash bands.
Hash bands indicate when miners have capitulated, showing the divergence between the 30-day moving average and 60-day moving average of Bitcoin’s hash rate; having miners capitulate indicates that Bitcoin has become too expensive to mine — ie That said, the market price of bitcoin is too low to cover the cost of electricity required to produce it.
According to Hash Ribbon, when the 30-day EMA of Bitcoin’s hash rate crosses the 60-day EMA, the worst period of miner capitulation is usually over. Since the beginning of the year, we’ve seen three separate instances of this switch, shown in dark red in the image below.
Chart showing the Bitcoin Hash Ribbon metric from January 2022 to October 2022 (Source: Glassnode)
Data analyzed by CryptoSlate shows that serious miner capitulation began in mid-June this year and continued until mid-August. The data is backed by the hash bands shown in the image above.
A look at the BTC holdings of the top 9 publicly listed Bitcoin mining companies further supports this trend. Several large miners created significant selling pressure during May-June, liquidating around 8,765 BTC.
While selling pressure appears to have stabilized month-to-month since June, quarterly data paints a very different picture.
Bitcoin holdings by the top 9 public Bitcoin miners decreased from 125,171 in Q2 to 102,407 in Q3.
Table showing BTC holdings of the 9 largest listed Bitcoin mining companies from January 2022 to September 2022
The numbers shown in the table above fell further in October. Earlier this month, Core Scientific liquidated more than 1,000 BTC held in September and reported that it held only 24 BTC on October 26.
With mining difficulty and hash rate at all-time highs, miners’ revenue and resources are squeezed. The average hash rate has grown every quarter in 2022 and is expected to grow at a higher rate as the fourth quarter ends.
Table showing the average hash rate of the top seven public Bitcoin miners in 2022
Data analyzed by CryptoSlate shows that Bitcoin’s decline in the second half of the year has led to a significant reduction in miners’ income.
Graph showing Bitcoin miner revenue per exahash from 2011 to 2022 (Source: Glassnode)
Bitcoin’s price volatility, falling income and dwindling Bitcoin holdings also impacted the stock market. Since peaking in October 2021, all publicly traded bitcoin mining companies have seen their share prices fall sharply. Core Scientific leads the way, with CORZ down nearly 90% over the past year, followed by Argo Blockchain and BitDigital, down 88%.
Chart showing share prices of publicly listed bitcoin mining companies from October 2021 to October 2022 (Source: TradingView)
With the hash rate expected to grow further and the bear market with no end in sight, we could see continued miner capitulation until the end of the year. While the data shows miners have exited the deep red zone, either flat or consolidating, the worse is not over. If the current situation continues, we could see another miner capitulate before the end of the year, creating additional selling pressure that could further impact sensitive markets.
The post Research: Public Bitcoin Miners Shows We Can Expect Second Capitulation appeared first on CryptoSlate.
Source of information: Compiled from BITCOININSIDER by 0x information.The copyright belongs to the author Anonymous, and may not be reproduced without permission