The declining mining activity is a bull signal for Bitcoin!!
According to VanEck's new report, the recent drop in mining activities could be a bullish signal for Bitcoin.
VanEck analysts noted in a report published on Monday that historically, Bitcoin has a higher probability of generating positive returns following periods of declining mining activity.
Analysts stated that since 2014, during periods when the network's hash rate has dropped, the 90-day forward Bitcoin returns have been 65%, while during periods when the hash rate has increased, this figure was 54%.
“Some historical indicators suggest that declines in the hash rate could indicate bullish trends for long-term investors,” stating that this trend is linked to a “reverse signal” associated with miners capitulating as weak operators exit the network under financial pressure.
VanEck noted that the historical correlation has re-emerged with a 4% drop in Bitcoin's hash rate in the month leading up to December 15, marking the sharpest decline since April 2024:
“Additionally, when hash rate compression persists longer, positive forward returns tend to appear more frequently and in larger magnitudes.”
The report highlighted that while miners face increasing pressure, long-term institutional buyers are taking space to absorb the supply. VanEck mentioned that especially digital asset treasuries (DAT) have accelerated their purchases during price declines last month.
VanEck stated, “Going forward, we believe that the strategy of many DATs will be to move away from common stock issuance and instead finance BTC purchases with the proceeds from preferred stock sales.”
