Can Miner Capitulation Predict The Bottom In Bitcoin's Price?

#bitcoin #crypto #cryptocurrencies
I explain why miner capitulation can precede a Bitcoin bottom in price and talk about how to spot this miner capitulation in time. Step by step breakdown.

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Bitcoin’s price action has experienced a relief rally this week, for the first time in weeks when looking at the Weekly chart. The 200 Weekly Exponential Moving Average was a support upon last week’s Weekly close but has since given way. But the positive thing is that Bitcoin has rallied once again so as to test this 200 WEMA as a resistance. It’s important for Bitcoin to close above the 200 WEMA otherwise it may reject price.

But if we zoom out even more than the Weekly timeframe to the 10 Week timeframe, we’ll notice that Bitcoin has only just rebounded from the bottom of its macro market structure and may be on the way to recovering some of the losses of the recent 53% Bitcoin crash.

Miner capitulation can precede a Bitcoin bottom. On-chain analytics suggest that miners capitulate at the bottom of new market cycles. But we also tend to see miner capitulation prior to the Bitcoin Halving. After all, whenever the Halving occurs, the total revenue of miners gets cut in half. This has an adverse effect on mining operations, especially the smaller business which unfortunately tend to capitulate and close their business due to unprofitability.

Big mining operations on the other hand however tend to HODL. Hold on for dear life, as the meme goes. Because, even though the block reward got halved, bigger mining operations tend to hold their Bitcoin until the price increases to the point where they have at least reached the total revenue point from prior to the Halving.

So not only does Bitcoin become scarce due to the Halving, but miners tend to hold on to mined Bitcoin, which amplifies this effect to an extent. Miner capitulation can predict reversals in Bitcoin’s price and it would be wise to pay attention to on-chain analytics going forward.

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