Re-posting my response to this in the correct thread...


A few of the metrics to keep an eye in the coming days of weeks are the following (as referenced above):

Mining cost: https://en.macromicro.me/charts/29435/bitcoin-production-total-cost
Mining difficulty: https://www.blockchain.com/charts/difficulty?timespan=2years&scale=0
Difficulty estimator: https://www.bitrawr.com/difficulty-estimator
Hash rate: https://www.blockchain.com/en/charts/hash-rate?timespan=2years

There is also a hash ribbons chart, but it doesn't appear to be accurate or up to date*:
https://www.lookintobitcoin.com/charts/hash-ribbons/

*Or uses different hash rate data than the trading view indicator therefore hasn't signalled capitulation

Will contribute any relevant updates to the above metrics to this thread  

Not quite. $25.5K is only the current mining cost (today's). Yesterday it was $20.4K, tomorrow it could be $30K. The issue would be price dropping below the average mining cost, whatever that may be at the time. What's always more relevant however has been the buy signal (when the hash rate recovers), as opposed to the capitulations. Sometimes the miner capitulations can be during healthy upwards price recoveries.


If price drops below the average mining cost, you will inevitably see some miners switching off (more so than miners switching on). Of course this is subjective to where in the world you are mining. In the US the average cost is reportedly the $30K level, so US miners are likely to switch off below this level (and switch back on above it), to avoid mining at a loss. For other countries, it could be $20K, even $10K, so they'd be switching more on if they can, especially if the mining cost reduces. Or with renewable energy, it could be substantially lower, though the cost of ASIC Miners still exists for the green miners.


More of less, but again this depends on the mining cost, hash rate, as well as difficulty. If the mining cost were to stay at $25K levels, and price then stays above $30K, then sure it's likely to provide a buy signal, as more miners switch back on. But without checking specifically at which hash rate level (and time-frame) the 30MA and 60MAs would crossover again, it's far from a certainty even if very likely.


To put it simply, yes. They aren't affected by the daily/weekly hash rate, but more so the difficulty that changes every 2 weeks. So if the difficulty decreases (and therefore costs reduced), it becomes more profitable to mine, and when it increases it becomes less profitable. If on one day the cost of a US miner is $30K, and price goes below it, then for sure these miners would likely switch off - until the price goes back above it.

While miners as an industry are known to sell large amounts Bitcoin when it is high, and avoid selling too much when it is low, it's just like any other business - it's about making profits, not hodling. This is where the phrase mining capitulation comes from. It's nothing to do with miners selling their BTC, but to do with miners switching off their machines because the cost of mining is higher than the current price.

So far, this "capitulation" has already subsided as hash rate continues to increase, hence the hash ribbons indicator already showing yesterday's circle with a green background (recovery stage):



In case it's not obvious, this looks nothing like previous capitulations where the MA30 and MA60 were both trending downwards, with hash rate below both and continuing to drop.

Zooming in on the 4hr chart, the 30MA and 60MA continue to climb and now closer to a bullish crossover (and therefore closer to a buy signal):



Compared to yesterday, the relevant metrics are as follows:

BTC price: $27.4K (down)
Mining cost: $24,679 (down)
Hashrate: 231.83m (up)
Difficulty estimator: +3.65%

Realized price is otherwise at $23,471. While price actions looks bad, this indicator is already looking promising.

A few relevant changes based on this minor capitulation, that so far remains a very "orderly" correction after already 2 weeks of hash rate consolidation (stagnation of growth):



Most notably, yesterday's average mining cost is now lower than current price @ 19 682 while hash rate has remained stable over the past 2 weeks. Difficulty dropped -2.35%, which isn't much of a drop at all, while the estimated drop in 12 days (so far) is a similar correction. This is unlike the 15-20% drops in difficulty (based on a collapsing hash rate) we've seen in the past, most recently in 2021.

If the average mining cost stays below current price, it's likely we'll see a full recovery in the near future. For example if mining cost remains at $20K or lower and price remains above that. Bitcoin's price will then need to return to the capitulation price of $30K in order for a buy signal to be confirmed (after hash rate recovery). As I stated for the past 2 weeks, this still isn't ringing any alarm bells yet.

BTC price: $21.3K (up sideways)
Mining cost: $19 682 (down & new low)
Hashrate: 223.431 (up sideways)
Difficulty change: -2.35% (2 days ago)
Difficulty estimator: -1.99% (in 12 days)

The language used in the explanation has made it more complicated, are we in a new correction wave or will the price see some bounce up (MA30 started to rise while MA60 continues to fall) and will it be to the next resistance level or are we just going back to the 22k barrier.

In the previous months, we wanted to notice that the beginning of the month was always bad, or the places where most of the correction occurred.

Hash Ribbons is getting extremely close to a bullish cross-over (recovery) as hash rate continues to remain stable. Average mining cost has reduced to $18.3K while price bouncing back to $20K levels.



I previously referenced that price would need to return to $30K (miner capitulation price) for a "buy signal" (in blue) to appear. However after further analysis, it seems price merely needs to increase beyond the recovery price, as opposed to the capitulation price. While this usually happens sooner after, as circled below this isn't always the guarantee (such as in May 2021) @ $43K.

In this example the hash rate signalled a recovery at $43K, but price continued to decline, actually instigating another miner capitulation soon after. While the mining economics aren't the same as in Summer 2021 when China banned mining, and therefore hash rate saw a considerable decline, the green recovery signal isn't enough to confirm a strong buy signal.



This would otherwise be the first buy signal since August 2021 @ $44.6K, when price saw a 50% increase after such a signal, as one of the lowest % returns from this signal.

BTC price: $20K (sideways/up)
Mining cost: $18.3K (down)
Hashrate: 227m (sideways/up)
Difficulty estimator:+1.2 (in 2 days)