Bitcoin miners did see some relief as miners’ balance hit a four-year high on Glassnode. Well, for starters, the recovery across the BTC market could have aided the same. However, can August bring in more relief given the past relationship between miners and the crypto?
Mending the past
Miner capitulation remains a key indicator to decide if the relationship is improving or not. Miner capitulations are when a significant net % of miners turn off machines over an extended period of time. Cryptocurrency mining firm Blockware has now published its latest Intelligence Newsletter on 29 July to showcase the same.
Looking at the hash ribbon metrics, the current miner capitulation episode began on 7 June. Obviously, it lasted a significant amount of time. According to Blockware, capitulation, as defined by hash ribbons, should be over as soon as the market recovers.
Source: Glassnode
The Bitcoin Hash Ribbon indicator tries to identify periods during which Bitcoin miners are in distress and may be capitulating. Hash ribbons take the 30-day and 60-day moving average of the Bitcoin hash rate, which is used to determine when sufficient miner capitulation has occurred.
The firm wrote,
“Since 7 June, other new generation mining rigs have plugged in by both public and private mining companies. However, enough old generation machines or inefficient over-leveraged miners have shut off, that hash rate and difficulty have actually decreased in size.”
Now the market seems to be recovering after Bitcoin surged to $23k. Furthermore, the network could see some relief as the Newsletter added,
“If there are no new lows in Bitcoin, we should expect the miner capitulation to end in August or September at the latest.”
In addition to this, mining difficulty is due for its first increase in two months on 4 August after three straight downward adjustments in a row. Mainly because the network is over halfway through this difficulty epoch. “Currently, it’s projected to be positive, and there is a high probability that it persists,” the blog asserted.
Taking charge here
Also, data from blockchain analytics platform CryptoQuant indicated a surge in Bitcoin block reward accumulation, pointing to a possible end to the current downtrend of digital assets. Here, Block reward refers to the incentive crypto-miners receive for successfully mining a block of crypto-assets.
Source: CryptoQuant
The aforementioned graph underlined that consumers accumulated the asset and a bull run may just be around the corner. To further support this narrative, Ki Young Ju, CEO of CryptoQuant, t00 reiterated the same accumulation phase narrative.
The last #Bitcoin accumulation phase was in mid-2020, lasting for 6 months.
As of May 2022, for me, it's pretty obvious that $BTC is in an accumulation phase. Institutions that drove the 2021 bull-run bought in this $25-30k range too.
Why not buy? Serious question. https://t.co/hvHX0bPa6b
— Ki Young Ju (@ki_young_ju) May 29, 2022
