Ever since the Bitcoin halving on May 11th, investors have been fearing a widespread “miner capitulation.”
A miner capitulation is an event in the cryptocurrency market when many miners of BTC become unprofitable. This often happens due to one of three things: 1) price correction, 2) a network difficulty adjustment or 3) a block reward halving.
In becoming unprofitable, miners are forced to liquidate the Bitcoin they mined en-masse to keep their lights on. This forces the market much lower than it started.
Although the effect on prices has not been evident, data shows that miner capitulation has begun yet again. The thing is: the cryptocurrency market has held strong.
Bitcoin Miners Are Capitulating But the Market Isn’t Having It
On May 31st, prominent Bitcoin investor and commentator Conner Brown shared the below data as evidence that miner capitulation is starting.
It shows that over the past week, addresses believed to be owned by miners have spent/sold 673 more coins than they generated. In the last day alone, 279 excess coins were sold, showing Bitcoin miners are trying to keep their operations afloat by liquidating their holdings.
“This past week miners have sold 673 more bitcoin than were generated. We are seeing capitulation from inefficient miners, but prices are holding steady. What do you think happens when these miners are finally shaken out?” Brown explained.
Data on Bitcoin miner coin activity over the past day and over the past week. Image shared by Conner Brown; data from ByteTree.
Many may initially see “capitulation” as a bearish sign, but analysts are getting bullish because the BTC price has not been shaken amid this uncertainty.
Financial analyst, podcaster, and author Preston Pysh said that the price “has held WAY better than I ever expected,” as has the hash rate of the underlying Bitcoin network.
The strength of the price alongside the hash rate suggests buyers and other miners are coming in to fill the gaps caused by “capitulation.”
Pysh believes that it is a sign “things are going to get very interesting” after Thursday’s difficulty adjustment, which will allow these capitulating miners to get back into the race again.
Other Bullish Factors
This isn’t the only market factor convincing Pysh of the Bitcoin bull case at the moment.
In an extensive Twitter thread published towards the end of last week, he identified at least three. They are as follows:

Institutions through Grayscale and futures have been accumulating vast amounts of Bitcoin since the halving. Grayscale alone has more than a 50% lead on the number of BTC mined.
The Chinese yuan has begun to tumble against the U.S. dollar in response to Hong Kong relations.
The U.S. dollar is purportedly reaching a point where something “could break,” which would allow an alternative system to enter the fray.

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