Bitcoin’s network activity is signaling a potential market low.
Summary
- The Bitcoin hashrate decreased by 4%, marking the largest drop since April 2024.
- Corporate treasuries acquired 42,000 BTC while exchange-traded product holdings saw a decline.
- Historically, drops in hashrate have resulted in an average 180-day price increase of 72% for Bitcoin.
Recent data indicates mounting pressure on miners, traders, and short-term investors, although long-term confidence appears strong.
According to VanEck’s latest report, Bitcoin’s network hashrate has dropped approximately 4% over the last month, the sharpest decline since April 2024. This change coincides with a challenging month for Bitcoin’s price, which has seen a 9% decrease and volatility levels surpassing 45%, the highest since April.
Miner challenges increase as hashrate declines
Mining economics are under significant strain. The breakeven electricity cost for a 2022-era S19 XP miner has decreased from $0.12 in December 2024 to around $0.077 at present. Moreover, daily fee revenue has diminished by 14% month over month, while growth in new addresses has dipped by 1%.
VanEck points out that declines in hashrate typically occur when miners shut down operations or scale back. Historically, such declines have marked points of exhaustion rather than initiations of deeper market sell-offs.
Long-term data from VanEck indicates that Bitcoin tends to perform better following periods of hashrate weakness. Since 2014, when the 90-day hashrate growth turned negative, the 180-day forward returns were positive 77% of the time, averaging a gain of 72%. In contrast, periods outside these declines have seen average returns closer to 48%.
This slowdown is also influenced by external factors. In the Xinjiang region of China, approximately 1.3 GW of mining capacity has reportedly been shut down due to policy scrutiny, which could account for nearly 10% of global hashpower. An estimated 400,000 machines may have ceased operations.
Corporate acquisitions rise as leverage diminishes
While holdings in spot Bitcoin ETPs fell 120 basis points month over month to 1.308 million BTC, corporate treasuries have been increasing their positions. Digital asset treasuries accumulated 42,000 BTC from mid-November to mid-December, raising total holdings to 1.09 million BTC, the largest increase since July.
A significant portion of the purchases came from Strategy, which acquired 29,400 BTC while maintaining a market NAV above 1. Other firms are shifting their focus from common stock issuance to preferred shares for future funding.
On-chain data reveals a distinct division among holders. Coins held for 1 to 5 years have experienced notable balance declines, with a 12.5% reduction in the 2 to 3-year category. Conversely, coins held for over five years have remained relatively stable, showing little change or even slight increases in balances.
Currently, VanEck observes a recurring trend: short-term pressures are filtering out weaker holders, miners are facing challenges, and long-term investors are retaining their assets. Historically, this combination has often paved the way for more stable price movements in the following months.
