Bitcoin at a crossroads – Miner capitulation vs signs of market stability

• Bitcoin was trading close to the $59,000 range at press time
• There seemed to be some miner capitulation, but large miners still accumulated

Bitcoin faced significant miner capitulation last week as its price dipped, leading to heightened outflows from miners. This occurred alongside a spike in mining difficulty, with the same reaching its highest level in years and putting additional pressure on miners. However, recent metrics indicate that this capitulation may be nearing its end as Bitcoin showed signs of stabilizing somewhat. 

Bitcoin sees miner capitulation

CryptoQuant‘s data revealed that Bitcoin saw significant miner capitulation last week as its price dropped to the $49,000-range. On 5 August, daily miner outflows surged to 19,000 BTC, the highest level since 18 March. 

This sell-off occurred as miners faced increasingly narrow profit margins. The margin fell to 25%, the lowest since 22 January.

Source: CryptoQuant

The analysis further indicated that some miners sold portions of their reserves, realizing a loss of $22 million – Marking the largest daily loss since 29 May. A sharp hike in hashrate and network difficulty drove this wave of capitulation. 

The metrics reached new all-time highs over the past week, putting additional strain on miners’ operations. These challenging conditions forced miners to liquidate holdings to cover costs, highlighting the pressure they faced during this period.

Current state of miners’ holdings

That’s not all. The holdings of smaller miners reached a low point due to the recent capitulation in the Bitcoin market.

Data from the Miner Balance by Cohort revealed that even before this latest capitulation, smaller miners (pink line) were experiencing a steady decline in their Bitcoin holdings – A trend that intensified following the halving event in Q2.

Source: CryptoQuant

On the contrary, larger miners have been increasing their holdings. According to the aforementioned analysis, larger miners (violet line) have continued to accumulate Bitcoin, with their total holdings now amounting to 66,000 BTC.

This accumulation by larger miners has contributed to a decline in overall Bitcoin capitulation. Especially as the price of BTC notes a slight recovery.

Resistance at $60,000 despite recent gains

Since Bitcoin fell below its short and long-term moving average (yellow and blue lines), the $60,000 price range has consistently served as a significant resistance level. Analysis of Bitcoin’s daily timeframe chart indicated that the yellow line provides resistance around $61,000, while the blue line marks another resistance point at approximately $62,000.

At the time of writing, Bitcoin saw an over 2% hike over the last trading session, closing above $58,000.

While this recovery is not yet a return to previous highs, it marks a positive move upwards from the recent dip to $49,000, which triggered miner capitulation.

Source: TradingView

– Read Bitcoin (BTC) Price Prediction 2024-25

Though still shy of breaking past the critical $60,000-resistance, this uptick might precipitate a gradual recovery.

However, Bitcoin must overcome these key resistance levels to regain stronger bullish momentum and move closer to its previous highs.