Crypto investors have been feeling a kind of déjà vu with the sluggish price of bitcoin having barely budged for months now. However, data shows demand for the cryptocurrency has slowly been returning and could soon be reflected in prices. Bitcoin has been wrestling with $70,000 for much of this year, its struggle was exacerbated when miners began selling their bitcoin in greater amounts last month, seeking to cover operating expenses following weeks of depressed transaction fees and the slashing of miners' block reward at the halving .
Some larger mining companies have started using their bitcoin reserves to earn yield or hedge their exposure. Now, "miner capitulation," as the forced selling is often called, has reached levels comparable to December 2022, which marked a 7.6% drawdown in the Bitcoin network hash rate – or the total computational power used by miners to process transactions – and the cycle bottom after the FTX collapse, according to CryptoQuant.
"Miner capitulation has historically marked price bottoms, given that it signals prices are too low for the least efficient miners to be profitable," Julio Moreno, head of research at CryptoQuant, told CNBC. "After halvings, a drawdown in network hash rate of around 7%-12% has marked the bottom and preceded price rallies. Currently we have a drawdown of 7.
7%." The increase in bitcoin price, however, will depend on growing demand for bitcoin, which usually increases before showing up in prices, he added. Demand .
