Bitcoin has just come out of the miner capitulation period, here's what to expect

The price of cryptocurrencies has been glued to the low $20,000 levels for a while now, showing little or no signs of a major upward movement in the near future. The market has been showing signs of capitulation and there is a lack of optimism for a bull reversal in the coming weeks.

There are multiple on-chain and macro signs that point to a loss of confidence in the market. However, diving deeper into these fundamentals shows that not everything is so bleak.

The S&P 500 saw one of its most volatile periods in the past five weeks, surpassed only by the stock crisis we have seen in the late 1920s and mid 1970s. Since the beginning of the year, the index posted a 13% loss.

Other indexes have performed equally badly. The Dow Industrial Average, the Nasdaq 100 and the NYSE Composite have had losses of 10%, 19% and 11% in the past, and so far 2022 has been one of the worst years for index returns.

Consumer sentiment has also been at an all-time low because of the increased volatility of the traditional market, combined with the worsening global socioeconomic outlook. Consumer sentiment dropped as low in the past 40 years, the only time that consumer sentiment fell in the U.S. was at the beginning of the 1980 recession.

While Bitcoins have been matching the traditional market's performance, several on-chain indicators show that it could be close to the end of its capitulation period.

One of the best measures of the strength of a digital currency is miner confidence. As the most resilient players in the crypto ecosystem, miners have signaled the bottom ofBitcoin. It has also been a solid buy signal as every period of miner capitulation was followed by a trend reversal and an onset of a bull run.

The current hash rate is used to determine whether miners have capitulated. Hash ribbons are an indicator of the 30 day and 60 day Simple Moving Averages SMAs During bull markets, the 30 day SMA rises faster than the 60 day SMA, while bear markets push the 30 day SMA below the 60 day SMA.

The 30 day SMA dropping below the long-term SMA marks the beginning of a miner capitulation period that ends once the trend reverses.

The current capitulation period is about to break two months, currently standing at 61 days, according to data from Glassnode. This is the fourth-longest capitulation period in the history ofBitcoin, surpassed by the ones in 2012, 2019 and 2021.

The recovery of the market confidence inBitcoin hasn't been affected by the long miner capitulation period. The network has exited capitulation and is entering a more hopeful period, according to the net unrealized profit loss.

The state of the network is seen through the net unrealized profit loss NUPL, which determines whether the network is currently in a state of profit or a state of loss. A high NUPL value indicates an overall state of net profit, and is a good time to exit the market and take profits. A NUPL value deep in the red is a good time to enter the market.

Data shows thatBitcoin has just come out of a capitulation period as its entity-adjusted NUPL has gone above zero.

It is used to track the risk-reward balance and to show incentives to sell or hold, as well as to show the confidence of long-term holders. Long-term holders conviction is high when its risk reserve is low, signalling an undervaluation. Risk reserve bottoms can sometimes be seen in early bull markets and can sometimes be seen in the final phases of bear markets.