Bitcoin price may fall below $ 20,000 when miners face capitulation (analysis)

Data on the chain reveals that bitcoin miners may be close to their capitulation after selling the most significant portion of their BTC holdings in recent months. As such, the price of the asset could go up against another short-term fall to “well below” $ 20,000, CryptoQuant warned.

Do Bitcoin miners capitulate?

The company’s Miners Reserve chart shows the general behavior of BTC miners, and as the graph below shows, they sold a significant portion of their holdings in recent weeks. This came after accumulating for over a year after the previous such sale in early 2021.

However, there is a significant difference between the two sales. Back in January 2021, miners most likely made a profit when bitcoin rose to a new all-time high of about $ 30,000. Now, however, the landscape is different since the asset has shrunk by about 70% since the last peak in November 2021.

According to CryptoQuant, the latest correction, exacerbated in June, which turned out to be the asset’s worst trading month in a decade, “forced” miners to sell their BTC at current market prices to “minimize potential losses and reduce overall risk. ”

Concluding that miners are now in a distribution phase, the research resource warned that this growing selling pressure caused by the capitulation event “could push the price even lower in the short term and bitcoin could fall well below the $ 20K mark in the near future.”

Miners’ suffering, declining cannabis frequency

Market-wide retracement, perhaps driven by the Terra collapse in May, 3AC, Celsius, the BlockFi failure in June, and the general economic turmoil, pushed BTC hard south in recent months, leading to falls below $ 20,000.

Miners, the backbone of the world’s largest cryptocurrency, had to sell some of their parts, as mentioned above. In fact, a report claimed that they threw away all their productions in May, while several other miners did the same in June as well.

Still, it was not enough for companies like Compass Mining, which had to lay off 15% of employees just a few weeks after two of the C-level executives left the company.

The mining landscape received another hit from the weather conditions in various American states. Marathon Digital’s mining operations in Montana were damaged after a massive storm, while several Texas – based miners had to stop working due to rising temperatures.

Overall, the hash rate has fallen by 25% since the peak was mapped a few weeks ago and is now down to 190 Ehash / s.