The Bitcoin network hashrate has fallen to its lowest level since December 2022. At that time, Sam Bankman-Fried’s FTX had just collapsed and we were at the absolute bottom of the previous bear market. Now, the Bitcoin price is around $63,000 and we have just had the halving.

Hashrate Signals Price Bottom for Bitcoin?

According to data from CryptoQuant, the True Bitcoin Hashrate Drawdown has now reached -7.6%, implying a potential price bottom for Bitcoin.

The argument for a bottom is supported by other indicators such as the Bitcoin Exchange Reserve, the Miners Position Index (MPI), and the Bitcoin Miner Reserve, all of which point to relatively low selling pressure.

In the past few weeks, more and more indicators suggested that miners were capitulating, such as the Hash Ribbons above. The Hash Ribbons measure the 30-day average of the hashrate versus its 60-day average.

When the 30-day average drops below the 60-day average, it is often a sign of capitulation by miners. According to Capriole, the investment fund behind this indicator, this is a buy signal for Bitcoin.

More problems for the miners?

In the run-up to the April 2024 Bitcoin halving, Cantor Fitzgerald shared a report on the challenges miners faced as a result of the decreased block subsidy.

The report identified 11 mining companies, including Marathon Digital, Hut 8 and Argo Blockchain, that could become loss-making due to high mining costs and lower rewards.

According to that report, many large miners would be in trouble if the Bitcoin price fell below $40,000. That would “force them to capitulate” and therefore first sell all their Bitcoin and then possibly go bankrupt.

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