Viewpoint: Miners surrender, hashrate plummets, selling pressure weakens, Bitcoin is expected to rebound in the near future

Bitcoin’s recent volatility has caused severe technical damage to its market structure and has also led to a mass capitulation among BTC miners, with Bitcoin falling from highs of $10,500 to lows of $3,800, making it no longer profitable for many small mining operations.

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There is a reason for miner capitulation, which can be reflected in Bitcoin's hash rate, which has dropped significantly over the past three weeks.

The hash rate decline may not be over yet, as some simple factors seem to suggest that more miners may capitulate in the short term.

However, bulls may be happy that the decline in hashrate will likely ultimately have a positive impact on Bitcoin’s price, with the capitulation of small miners likely relieving some of the selling pressure on the cryptocurrency.

Bitcoin hashrate continues to decline: down 20% from all-time high

Bitcoin’s computing power (hash rate), which represents the number of calculations performed per second (TH/s) by the BTC blockchain, is often viewed as an indicator of the cryptocurrency’s underlying network strength.

Its hashrate has fallen dramatically over the past few weeks along with Bitcoin’s price, from an all-time high of around 125 million TH/s in early March to its current level of around 100 million TH/s, a 20% drop.

The plunge comes as BTC shows signs of technical weakness, with its recent sell-off causing many smaller miners to shut down their machines due to unprofitability.

Why is a decrease in hashrate good for BTC prices?

While some see the decline in hashrate as a sign of weakening underlying network strength, it could actually be a sign that Bitcoin is poised for a significant rebound in the near term.

One of the roles of miners in the crypto market is to provide a steady selling pressure on the cryptocurrency market. They sell the BTC they mine for fiat currency to fund the continued operation of mining activities.

This is especially true for smaller mining operations, as large mining companies are able to continue operating at unprofitable levels due to their large amounts of capital.

When the price of Bitcoin drops so sharply that it is no longer profitable to mine, many smaller operators temporarily shut down their mining machines, while larger operators hold on to the BTC they have acquired, hoping to sell it for a profit at a more favorable price.

That being said, the decline in hashrate could be a sign that Bitcoin is about to see a reduction in the selling pressure provided by miners, which would provide plenty of room for a rebound.

Bitcoin hashrate figures could also fall further in the short term, with the upcoming block reward halving and current technical weakness likely to make mining BTC even less profitable. The less selling pressure there is, the more room Bitcoin has to rebound.

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