Bitcoin
When will Bitcoin finally recover from its recent crash?
- Bitcoin’s recovery may depend on the exit of inefficient miners and the stabilization of the hash rate.
- Willy Woo links current market trends with Bitcoin’s potential post-halving recovery and summer market lulls.
Bitcoins [BTC] The trajectory in 2024 was marked by significant volatility. Despite reaching an all-time high of US$73,737 at the beginning of the year, Bitcoin’s value has retreated significantly, currently sitting at around US$64,625.
This drop, which is approximately 12.4% compared to its peak, has sparked discussions among market analysts about the potential for a recovery.
Will BTC Recover Soon?
Willy Woo, a renowned cryptocurrency analyst, took to social media, X, to to discuss the crucial factors that could signal the start of Bitcoin’s recovery.
At the heart of Woo’s analysis was the phenomenon of miner capitulation, which refers to the exit from the market of less efficient miners due to a lack of profitability.
According to Woo, Bitcoin’s price recovery could begin as soon as these weaker miners exit the market, allowing the hash rate – a measure of total computing power used in mining and processing – to stabilize and recover.
Notably, miner capitulation occurs when the Bitcoin halving – a pre-scheduled reduction in rewards given to Bitcoin miners – renders aging hardware or high-cost operations unviable, driving inefficient miners out of business.
As explained According to Woo, this process is painful but necessary for the long-term health of the market, as it eliminates inefficiencies and consolidates mining operations to more capable participants.
These dynamics are critical, as they reduce the pressure of constant sales on the part of miners who need to cover operational costs, potentially paving the way for price stabilization and subsequent increases.
Source: Willy Woo on X
Historically, post-halving periods have been followed by significant price increases following initial volatility. Woo draws parallels to previous cycles in 2017 and 2020, noting that current market conditions reflect these earlier phases, but with a delayed recovery.
In particular, Woo explained that the recovery timeline can vary, as seen in previous cycles.
For example, the 2017 recovery lasted 24 days during the slow summer months, a stark contrast to the 2020 recovery, which lasted just 8 days amid the market chaos triggered by the COVID-19 pandemic.
Now, it has been more than two months (61 days) since the last halving, and the market is still waiting for the capitulation phase to complete, which Woo suggests could align with traditional slow financial periods like the summer months. , when many investors are less active.
Source: Willy Woo on X
Is Bitcoin ready?
To better understand Bitcoin’s recovery potential, AMBCrypto analyzed specific metrics such as the Miner Position Index (MPI) and the Exchange Stablecoins Ratio USD.
IPM is currently at -0.97, indicating a possible decrease in selling pressure from miners, which could be bullish for Bitcoin prices.
Source: CryptoQuant
Meanwhile, the Exchange Stablecoins Ratio USD, now at 8.48, has slightly decreased by 0.97% over the past day.
This ratio assesses the potential purchasing power on stock exchanges, with lower values generally indicating stronger potential purchasing pressure, which could drive price increases.
Source: CryptoQuant
To read Bitcoins [BTC] Price prediction 2024-25
Despite these technical indicators, the real-world impact on traders, especially those in short positions, continues to be significant.
With almost $1.84 million at risk of liquidation If Bitcoin surpasses the US$70,000 mark again, the stakes are high.