These Bitcoin metrics signal that a capitulation event is near
Several calculations currently suggest that the Bitcoin price is finally bottoming out after another capitulation event, possibly triggered by the Genesis/DCG/Grayscale saga.
This final miner capitulation may be imminent as miners are selling their BTC at the fastest rate since early 2016. In light of the new bear market low, some Bitcoin miners are currently going through arguably the hardest time ever.
BTC price fell to a new bear market low yesterday at $15,478, putting it in no man’s land. At the time of writing, Bitcoin was trading just above the low, at $15,678.
According to Charles Edwards, founder of the Capriole Fund, selling pressure among BTC miners has skyrocketed by 400% in the past three weeks. As a result, there is currently a “Bitcoin miner bloodbath”.
Miners are selling their Bitcoins more aggressively than they have in seven years. “If the price doesn’t go up soon, a lot of bitcoin miners are going to give up,” the fund manager said, add:
What we see now is not sustainable. Mine-and-hodl is not a viable strategy as a bitcoin miner. Miners are paying the consequences of the “never sell” arrogance that was prevalent just 6 months ago. They must constantly manage (trade) their bitcoin position in this market.
Data from Glassnode supports Edward’s claims. They show that miners’ total balance fell to a 10-month low this week.
This is because miners are forced to sell some of their BTC to cover their operating costs at the current very low price. Their holdings are now worth around $30.4 billion, which is still nearly 10% of the Bitcoin supply.
Bitcoin miners are currently facing several challenges. The hash rate is near an all-time high, as well as the mining difficulty.
Ultimately, many miners are suffering from the sharp increase in energy prices. All together, plus the weak Bitcoin price, is prime breeding ground for a renewed miner capitulation. However, Edwards also sees a big opportunity in this scenario.
“All previous Bitcoin cycles had bottomed at this point in the halving cycle. We have less than 100 days until all the other cycles went vertical. I’m getting very excited,” Edwards wrote via Twitter.
This is historically the optimal time to allocate to Bitcoin. All previous Bitcoin cycles had bottomed at this point in the halving cycle. We have less than 100 days until all the other cycles went vertical. I get very excited. Not investment advice. pic.twitter.com/O7BJr5qomz
— Charles Edwards (@caprioleio) 22 November 2022
Leading chain analyst at Glassnode, Checkmate, outlined that the profit/loss ratio of all BTC that moved last week is massively negative. “Less than $80 million in profit, while $4.3 billion in losses booked. Surrender.”
Meanwhile, Will Clemente, co-founder of Reflexivity Research emphasized that Bitcoin is doing well in the long term, cites four key figures. Clemente said long-term holders continue to buy BTC.
Despite massive unrealized losses, the largest ever, access to long-term owners is at a record high. Ultimately, blocks continue to be added while active addresses reach new higher lows.
