After the block reward halving in May, Bitcoin’s mining ecosystem was immediately thrown into disarray.
The revenue of miners was effectively halved overnight, forcing many miners with tight profit margins to go offline as they could not maintain a positive cash flow in the wake of the event. This resulted in a slowdown in transaction speeds along with an increase in transaction fees.
From the pre-halving peak to post-halving trough, the hash rate of the Bitcoin network dove by ~40% — a sign of “miner capitulation.”
Since the halving, though, Bitcoin miners have found their footing once again. Blockchain data firm Coin Metrics, for instance, observed on June 14th:
“The CMBI Bitcoin Hash Rate Index demonstrates that hash rate has now largely recovered to its pre-halving levels.”
This bodes extremely well for the cryptocurrency’s long-term uptrend, with a crucial bull signal about to appear once again.
Crucial Bitcoin Signal Is About to Appear
Matt D’Souza, chief executive of Blockware Mining and a fund manager in the space, noted that his firm’s data indicated that at the halving, approximately 30% of the network’s hash rate was at risk of capitulation.
Finance podcaster and Bitcoin bull Preston Pysh echoed this, explaining in response to D’Souza’s comment:
“During the 2016 halving, the price went sideways for 9 days and then had a 28% drop, and it took 100 days to get back to the halving price. Mentally prepare yourself for the efficiency cleansing and difficulty adjustment as the protocol prepares all passengers for launch.”
With Bitcoin’s hash rate crashing around 40% as aforementioned, this capitulation happened.
But the hash rate crash has been followed by a surge, with BTC miners entering back into the industry with new strategies and machines to increase their profitability.
This recovery has allowed Bitcoin’s Hash Ribbons — an indicator that derives signals from the movements of BTC’s hash rate — to begin trending towards a…