Bitcoin
Bitcoin: As BTC miners sell big, should you be worried
The jump in sell-offs follow a profitable last month for miners in 2023.
- Miner to exchange flows surged dramatically in recent days.
- Increased revenue prompted miners to liquidate their stashes.
Bitcoin [BTC] miners sent a large proportion of their stashes to crypto exchanges recently, triggering anxieties among market participants.
According to AMBCrypto’s analysis of CryptoQuant data, the 7-day moving average of miner to exchange flows jumped to its highest value in five months on the 1st of January.
Source: CryptoQuant
Are miners locking in gains?
Miners, as we all know, frequently liquidate their holdings to cover costs incurred in setting up mining infrastructure. However, such events end up exerting significant downward pressure on the price of Bitcoin. This is because miners are one of the largest holders of the asset.
A CryptoQuant analyst drew attention to previous such instances. A sharp increase in miners’ deposit to exchanges in May 2023 triggered a significant price drop.
In fact, a similar drop in the value of BTC was witnessed after the recent transfer of coins from miners to exchanges.
“We need to keep an eye on whether this surge in miner deposits is temporary or sustained for wise investment,” the analyst who goes by the pseudonym SignalQuant noted.
The jump in sell-offs follows a profitable last month for miners in 2023, during which transaction fees skyrocketed.
Indeed, miners racked up more than $23.7 million in transaction fees on the 16th of December, as Ordinals frenzy pushed demand for blockspace.
Source: CryptoQuant
The steep rise in fee revenue boosted miners’ earnings to levels not seen since the peak bull market of 2021. After a prolonged and punishing bear market, miners couldn’t have hoped for anything better.
Such profits, therefore, justified miners liquidating their holdings.
Source: CryptoQuant
Read BTC’s Price Prediction 2023-24
Miners see high returns on hashing power
Bitcoin started 2024 on a strong note, bouncing above $45,000 with conviction, AMBCrypto detected using CoinMarketCap’s
data. The king coin was exchanging hands at $45,311 at press time.Apart from transaction fees, the market value of Bitcoin also impacts miners’ profitability. The hashprice soared to $102 per PetaHashes per day (PH/Day) on the 1st of January, indicating significant spike in earnings relative to hashing power committed.
Source: Hash Rate Index
