- Bitcoin miners’ capitulation could ease at $90k and offer new buying opportunities
- Average mining cost for BTC was still below the king coin’s value at press time
Despite the high risk of Bitcoin miner capitulation, analyst James Van Straten believes that the cryptocurrency could hold and mark $90k as the local price bottom. According to him, the Hash Ribbon, a key indicator that tracks miner profitability and potential exits from the market, has been flagged.
This hinted at BTC miner distress and a likely bottom signal for BTC, as per historical data. He said,
“Hash ribbon signalling miner capitulation which usually marks a bottom, typically lasts around 30 days. Last time was October 2024.”
Source: Glassnode
In most cases, the hash ribbon indicator has also acted as a buying opportunity as it has coincided with the cryptocurrency’s bottoms. Will the trend repeat itself though?
Will $90k stop Bitcoin miner capitulation?
Straten added that despite the expected 4% hike in Bitcoin’s network difficulty on 9 February, the king coin might still defend the $90k-$105k price range.
“Difficulty is expect to adjust 4% to ATHs on Sunday, more stress on miners. Have more confidence that $90k is the bottom of this range.”
For the unfamiliar, network difficulty (currently at 110T units) refers to how hard it is for miners to find a block (mine BTC). A 4% hike means miners have to use more computational resources to mine the cryptocurrency. By extension, this means an upward pressure on average mining costs.
As of 6 February, the average BTC mining costs, according to MacroMicro data, was $86.5k. If BTC’s price drops below the average mining costs, then the average miner will be underwater and under more pressure.
Historically, Bitcoin’s price has always stayed above the average mining costs. So, despite the expected increase in difficulty and more pressure on miners’ capitulation, a drop below average production costs could be a buying opportunity if BTC climbs higher later.
That being said, the king coin was valued at $96k at press time and could drop to the range-lows of $91k-$90k if bearish pressure persists.
