Miners have fixed electricity and debt costs against revenue set by price and block-reward. When price falls, or a halving cuts the subsidy, marginal operators run at a loss, sell treasury coins to cover bills, and eventually unplug.
Unplugging lowers hash-rate, which slows blocks until mining-difficulty adjusts downward and restores profitability for whoever remains. The process is self-correcting, and it takes weeks, which is why capitulation shows up as a phase rather than an event.
Its reputation as a bottom signal comes from a handful of past cycles, which is a small sample. The mechanism is real; the timing claim is weak, and miner selling is a modest share of daily volume in a market where derivatives dominate.
Related: hash-ribbons, hash-rate, mining-difficulty, puell-multiple