Bitcoin hashrate reduction reached the level of December 2022
Bitcoin's hashrate drawdown, a measure of the Bitcoin network's dip in relative computing power, has dropped to levels not seen since December 2022—following the fall of FTX during the depths of a previous bear market.
According to CryptoQuant data, the actual Bitcoin Hashrate Drawdown now stands at -7.6%, indicating that the decentralized asset may be undervalued.
The case for a market bottom is supported by other metrics such as Bitcoin Exchange Reserve, Miners Position Index (MPI) and Bitcoin Miner Reserve, each of which points to lower selling pressure.
Mining capital and current cycle
Over the past few weeks, several indicators have suggested that miners are beginning to gain traction in mining, indicating buying opportunities for BTC.
In early June, Charles Edwards, founder of crypto hedge fund Capriole, argued that the Bitcoin Hash Ribbons indicator developed by his company was flashing a buy signal, reflecting a relative slowdown in the network's computing power.
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Hash Ribbon measures the hashrate of the network by comparing the 60-day moving average of Bitcoin's hashrate to the 30-day average. When the 30-day moving average sinks below the 60-day moving average, it indicates a relative decline in hash power.
Market analyst Will Woo echoed Edwards in explaining that the market won't reach new highs until weak miners are forced to shut down — an event that typically occurs in the weeks leading up to a halving event but appears to be dragging on in the current cycle.
More recently, Bitcoin mining fees have halved to as much as 90%, indicating that selling pressure from miners has eased and Bitcoin's price will continue to rise.
Post-half facts and Bitcoin mining business
Ahead of the April 2024 halving event, financial services firm Cantor Fitzgerald released a report highlighting the challenges miners face following the block subsidy cuts.
The report revealed that 11 mining companies, including Marathon Digital, Hut8 and Argo Blockchain, are at risk of becoming unprofitable due to high mining costs and low rewards.
According to that report, if bitcoin's market price drops to $40,000, some of the world's largest mining companies will be forced to seize capital, underscoring the problem of the mining industry's halving.
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