Bitcoin Miner Capitulation: What Awaits Us?

Bitcoin Miner Capitulation: What Awaits Us?

The first publicly traded Bitcoin miner company has filed for bankruptcy. Therefore, it’s time to start talking about the capitulation of BTC miners. Crypto expert Dominic Basulto takes the issue and explains what it means for the BTC price.

Bitcoin miner capitulation is now obvious

Bitcoin miners are struggling with difficulties. But this may be enough news for anyone hoping for a Bitcoin rally. With the BTC price falling and the power price rising, BTC miners had a hard time making money in 2022. While profit margins are shrinking sharply, some are now shutting down their operations altogether in a process known as Bitcoin miner capitulation. The most obvious sign of capitulation by Bitcoin miners so far is Core Scientific filing for bankruptcy protection under Section 11 on December 21.

What does Bitcoin miner capitulation mean for the future price of Bitcoin? There are two different schools of thought on this. These include both the bear scenario and the bull scenario.

Bitcoin Miner Capitulation: What Awaits Us?

Bearish scenario for Bitcoin

The bankruptcy of BTC miners sucks for the Bitcoin price. Creating this bear scenario is easy. Most obviously, a random failure in Bitcoin mining adds to the overall bearish trend in the Bitcoin market. Wall Street investment banks will no longer offer Bitcoin mining shares as counterplay. Also, they will no longer recommend Bitcoin. Thus, everything related to BTC will start to look like a ‘sell’.

When Bitcoin miners start shutting down operations, the downward truth spiral begins. We’ve actually seen this happen with a few bankruptcies in the BTC mining division. For example, in September, we saw Compute North, which provides information, hosting services and infrastructure to Bitcoin mining companies, filing for Chapter 11 bankruptcy. Investors quickly began to control which BTC miners were valuable to Compute North.

In the worst scenario, BTC miners will actually start going bankrupt. And when they do, they will have to liquidate everything, including Bitcoin assets. As alleged, this puts more selling pressure on the Bitcoin price. For this reason, some traders are claiming that Bitcoin will fall as low as $10,000 based solely on concerns about the capitulation of BTC miners.

Bitcoin Miner Capitulation: What Awaits Us?

Bull scenario for bitcoin

The bankruptcy of BTC miners is neat for the BTC price. It is more difficult to create this bull scenario. Because it requires a leap of faith for new crypto investors. Historically, the capitulation of BTC miners has been one of the smoothest signs that we are close to reaching the bottom of the market. For example, in the 2018 Bitcoin cycle, BTC miner capitulation started when BTC dropped to $6,000. Then it went up to $3,000. Subsequently, a new BTC rally started.

So, from this perspective, we may be preparing for another BTC rally. As the BTC price rises from the bottom, mining BTC will become profitable once again. All mining companies that managed to avoid bankruptcy in this cycle will be able to participate in the upside potential. Subsequently, as BTC miners become more profitable, Wall Street investment banks will start recommending them. Thus, the cycle will begin again. Of course, past performance is no guarantee of future performance. Therefore, be careful not to rely too much on past price data.

bitcoin miner

The bull state of BTC miner capitulation also includes crypto market-specific factors, such as the overall BTC hash rate, which is a measure of how much computing power is used to mine BTC at any given time. Core Scientific specifically cited the ‘increase in the global BTC network hashrate’ as a key factor when it filed for bankruptcy. The bullish situation also includes analysis of the BTC metric currently held in the digital wallets of BTC miners. According to analysts, miners are not abandoning Bitcoin at the moment. Hence, this is also a positive sign for BTC price.

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Is BTC suitable for investment right now?

Bitcoin miner capitulation is an interesting starting point to consider what will happen to Bitcoin in the next 12 months. While there is certainly room for debate as to what this plausible signal means for BTC, I am certainly in the camp that considers the capitulation of BTC miners to be a positive sign for the future price of Bitcoin. I am bullish on BTC both in the short term and in the long term.

Bitcoin Miner Capitulation: What Awaits Us?

Core Scientific’s bankruptcy filing is certainly a source of worry. However, the company specifically said that the bankruptcy would not disrupt operations. BTC will not liquidate its assets. Also, he will try to hold on to his life for the next BTC rally to come. This sums up what many BTC investors have to think about right now. It is possible for bad news to be good news when it comes to BTC. If Core Scientific bankruptcy is a sign of the capitulation of BTC miners, then the market could eventually hit bottom. Now there is only one way to go from there: Above.

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