With the cooling down of the Bitcoin ecosystem and the halving event, inefficient miners have had to exit or suspend mining, resulting in Bitcoin’s hash rate dropping to the level at the end of 2022. However, several analysts believe this is a bullish sign.
Bitcoin completed its fourth halving in April this year, reducing miners’ block rewards from 6.25 BTC to 3.125 BTC. Although the Bitcoin Rune protocol once allowed miners to earn hefty transaction fees, with the protocol’s fading, the contribution to miners’ fees has dropped to less than 2 BTC per day on average, forcing inefficient miners to exit or suspend mining.
QCP Capital stated in mid-June that this phenomenon, miners being forced to sell coins, is the main reason limiting the price increase of Bitcoin. The withdrawal of Bitcoin’s hash rate has reached the level at the end of 2022. Miners’ surrender is also reflected in the decline of Bitcoin network hash rate, which is currently at 556.16 EH/s, a decrease of 7% in the past 24 hours. According to CryptoQuant data, the “drawdown of Bitcoin’s hash rate” has fallen to the lowest level since December 2022. The drawdown refers to the ratio of the current Bitcoin network hash rate compared to the previous peak. As the Bitcoin network hash rate usually increases gradually over time, this indicator can be used to better measure changes in the Bitcoin network hash rate.
Last weekend, the founder and CEO of CryptoQuant, Ki Young Ju, agreed with a netizen’s view that the surrender of small miners is a bullish sign, usually a characteristic before a bull market. Market analyst Will Woo echoed this view, explaining that the price of Bitcoin will rebound after weaker miners surrender and network hash rate recovers. With the drawdown of Bitcoin’s hash rate currently at historical lows, the hash rate may gradually rise, accompanied by the rebound of the coin price.
Miners’ withdrawal has reduced by 85%, indicating a weakening selling pressure from miners, which also supports the price of Bitcoin to some extent.
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