In a recent analysis by Jamie Coutts, the chief crypto analyst at Real Vision, a bullish picture for Bitcoin (BTC) has been painted based on a key indicator. Coutts highlighted that Bitcoin’s hash rate decline is slowing, indicating a potential reversal in the near future. This slowing decline typically precedes a bottom and reversal of a bearish trend, especially after events like the halving. However, Coutts emphasized that a bullish reversal is contingent upon a stabilization in the current downtrend.
The percentage difference between the 30- and 90-day moving averages of Bitcoin aligns with previous hash rate contractions, but it is not as severe as the post-2020 halving. This slowdown in hash rate decline suggests that miners’ capitulation may be coming to an end soon. According to crypto expert Willy Woo, the market is expected to recover when weak miners exit the market, and the hash rate rebounds. This process involves inefficient miners going bankrupt and others investing in more efficient hardware.
Ki Young Ju, CEO of Cryptoquant, offered insights into when miners’ capitulation might cease. He indicated that the capitulation phase typically ends when the daily average mined value is about 40% of the yearly average. Currently, the daily average is at 72%, suggesting that it may still take some time before miners stop selling off their reserves. Ju advised market participants to brace for a dull market for the next few months while maintaining a long-term bullish perspective and avoiding excessive risk.
Coutts also noted that the market is still recovering from a supply overhang, particularly in response to the selling pressure imposed by the German government. The German government offloaded nearly 50,000 BTC on the market, adding to the downward pressure on Bitcoin’s price. It may take some time for the market to absorb this excess supply and stabilize.
Despite the recent challenges faced by Bitcoin, analysts like Mikybull Crypto remain optimistic about the long-term outlook. Bitcoin is still far from its bull market peak, indicating potential for further growth. Coutts highlighted that while the market may experience short-term fluctuations due to various factors, the overall trajectory remains bullish for Bitcoin investors.