The collapse of the crypto exchange FTX causes a historic event in the Bitcoin market. Yesterday, on-chain data signaled the second wave of Bitcoin miner surrender in one cycle.
Historically, miners have had a massive impact on the BTC price. The now announced miner capitulation will put additional selling pressure on the Bitcoin price, which is experiencing a historically bad November, down 21%.
On-chain data shows that the second wave of miner capitulation has now begun, suggesting further pain for the BTC price. As analyst Dylan LeClair wrote, the Bitcoin hash rate is starting to tilt here.
Bitcoin Miners Under Water
The 7-day moving average hashrate is now 13.7% away from its all-time high. Mining difficulty is expected to adjust around -9% in a week, which will take some pressure off miners, at least in the short term.
However, mining margins have been and continue to be massively squeezed since June, the first capitulation event in this cycle. Despite this, the hashrate still rose to an all-time high until recently.
This, the increased mining difficulty, and the price crash related to FTX pushed the hash price to its lowest level since late 2020.
As Charles Edwards of Capriole Investments noted yesterday, hash ribbons have confirmed the beginning of a capitulation. “Spurred by the $10 billion FTX scam and subsequent collapse, bitcoin miners are now going broke and the hash rate is trending downward,” Edwards stated.
In the “Bitcoin miner net position change” chart, it can be seen that miners have been selling aggressively for the past month.
“Combined with the decline in the hashrate and today’s hashband bearish cross, this suggests that we are indeed in a miner capitulation phase,” said Will Clemente of Reflexivity Research.
How Long Will a Miner Surrender Last?
Something to remember is that miner surrender is usually the last stage of a Bitcoin bear market. In the 2018 cycle, the BTC hashrate continued to rise as the price reached the $6,000 mark until the final miner surrender came at $3,000.
In the current cycle, miners have already experienced surrender in June. They reduced their holdings by 4,000 BTC, equivalent to about $68 million, in the last two weeks.
Before that, they only started a net mass trend in September 2022, betting that the bottom had been reached. However, they bet on the wrong horse and are now severely punished.
Historically, miner capitulation has lasted an average of 48 days, which would end miner selling pressure in sight in mid-January 2023.
However, the most recent surrender ended just two months later, on August 18. The end marked the third longest surrender in history. Bitcoin bulls should therefore be cautious in December and January, and watch the behavior of Bitcoin miners.
At press time, BTC saw a slight uptick and was trading at $16,481.