Currently declining, Bitcoin’s value started declining from its May high of over $72,000. Especially displayed on the daily candlestick chart, there are concerns regarding additional losses even with a drop of roughly 10% from its all-time highs.
Analyst Willy Woo of Bitcoin on-chain largely attributes this drop on ongoing “miner capitulation”. Woo says the network is actively eliminating weak miners, which causes them to quit running their operations and liquidate their BTC holdings, maybe totaling thousands, if not tens of thousands of coins.
The values of Bitcoin are reduced as lessers quit the market and flood it with supply, hence further squeezing out more miners. This situation clearly shows the outcome of the Halving event that happened on April 20.
Miner Capitulation Strengthens Bitcoin
According to Woo, a required phase is miner capitulation. Eliminating less efficient players will eventually help to strengthen the network by liquidating BTC holdings of weak miners.
During the Halving event, miner incentives decreased from 6.25 BTC to 3.125 BTC, therefore reducing half of their income. This has increased competitiveness particularly in respect to major publicly traded mining companies like Riot Blockchain and Mara Digital.
Even if minor miners have discontinued operations, the hash rate of the network which denotes overall processing capacity remains almost record highs. Woo emphasizes the need of reducing excessively high leverage trading in Bitcoin futures, particularly on platforms like Binance, OKX, and Bybit, so helping to calm the market.
Future recovery of Bitcoin hinges heavily on the resolution of speculative speculations and inadequate miner liquidation. As Bitcoin continues its dropping path, uncertainty dominates as $60,000 or even the lows of May 2024 at $56,500 have extra negative consequences; so, maybe aiming support levels around $66,000.
