On Monday, the Bitcoin block reward halving finally came to pass. It was an exciting event celebrated by tens of thousands of cryptocurrency investors, with thousands packing into celebratory live streams, tens of thousands liking halving tweets, and hundreds of thousands hearing about Bitcoin via the news. The halving was so popular that at one point, the topic trended on Twitter in the U.S., the U.K., and Canada (and maybe other countries). This came shortly after it did the same in China. We got Bitcoin halving trending!!! — Tim Copeland (@Timccopeland) May 11, 2020 Although decisively bullish for Bitcoin in the long term, analysts say an “extreme” capitulation may take place in the coming days. But this may just be a short-term blip in a long-term bull market for the cryptocurrency. Bitcoin Could Be Subject to Another “Extreme Capitulation” Matt D’Souza, a hedge fund manager and the chief executive officer of Blockware Mining, explained after the halving that Bitcoin miners are at risk of “extreme capitulation.” The miner noted that per his firm’s data, approximately 30% of the network’s hash rate is currently made up of mining machines that are now operating at a breakeven price after the halving. If the price of BTC drops from $8,550, the breakeven level D’Souza indicated, or if the network hash rate increases from here, these marginal miners will be forced to turn off their machines. Digital asset manager Charles Edwards echoed this sentiment, noting that his analysis indicates the global average cost of mining one Bitcoin has risen to $14,000 after the halving. It’s Not Exactly a Bad Thing While “capitulation” sounds scary, especially since it has been affiliated with the late-2018 Bitcoin crash, it’s not exactly a bad thing. As prominent finance podcaster and Bitcoin bull Preston Pysh explained in response to D’Souza’s analysis: “During the 2016 halving, the price went sideways for 9 days and then had a 28% drop, and it took 100 days to get back to the halving price. Mentally prepare yourself for the efficiency cleansing and difficulty adjustment as the protocol prepares all passengers for launch.” During the 2016 halving, the price went sideways for 9 days and then had a 28% drop, and it took 100 days to get back to the halving price. Mentally prepare yourself for the efficiency cleansing and difficulty adjustment as the protocol prepares all passengers for launch. pic.twitter.com/5dNcs0ZnJ1 — Preston Pysh (@PrestonPysh) May 12, 2020 The key part of this statement is that it “prepares all passengers for launch.” Data compiled by Charles Edwards suggests that after every Bitcoin miner capitulation, which is often followed by a capitulation by broader crypto investors, a strong surge has taken place. The table below depicts this, as it shows that every time capitulation was signaled by the Hash Ribbons indicator, what followed was a massive macro surge to highs. Returns of the Hash Ribbons Indicator | Source: Charles Edwards Whatever happens with this potential capitulation, many assert that the long-term trend of Bitcoin is still bullish. Per previous reports from NewsBTC, a prominent crypto trader remarked that he is “struggling” to see a bear case for BTC in the long run, citing the macroeconomic environment, the halving, and exchange dynamics. Photo by Jackson David on Unsplash

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