Bitcoin Miner OTC reserves hit multi-year high: Will BTC feel the impact?

• Miners have added 153,000 BTCs to their OTC reserve in the last three months.
• BTC’s price trend has remained slightly bearish.

Recent analysis reveals that the Bitcoin Miner OTC reserve has surged to its highest level in years.

Historically, spikes in this metric have not always been favorable for Bitcoin’s price, and this trend appears to be continuing, as BTC has faced significant struggles in recent weeks.

Bitcoin miner OTC spikes

Recent data from CryptoQuant reveals that the Bitcoin Miner OTC reserve has surged to its highest level since 2022. 

The data showed that over the past three months, the reserve has increased by more than 70%. It climbed from 215,000 BTC in June to 368,000 BTC in August, which was a significant rise of 153,000 BTC. 

Source: CryptoQuant

Miners typically use OTC (over-the-counter) sales to avoid triggering negative price reactions from large-scale transactions.

However, historical analysis indicates that even with this strategy, Bitcoin’s price has struggled to avoid the impact of such substantial increases in the OTC reserve.

How price has responded

In May 2018, after the Bitcoin Miner OTC desk balances surged above 400,000 BTC, the price of Bitcoin was around $8,475. By December 2018, the price had declined by 63%, falling to $3,183.

A similar pattern occurred in November 2021, when Bitcoin was trading at approximately $64,000, and OTC desk balances for miners reached an all-time high near 500,000 BTC.

Two months later, in January 2022, Bitcoin’s price had declined by 45%, dropping to $35,058. These historical examples highlight the significant impact that spikes in OTC balances can have on Bitcoin’s price.

This increase in the OTC reserve could signal potential selling pressure from miners, contributing to the challenges in maintaining price stability.

Unfavorable market, leading to sell-offs

The current price volatility in the Bitcoin market has further intensified the recent spike in the miner OTC reserve.

Additionally, the recent halving event, which led to a decrease in miner rewards, has prompted miners to sell more of their holdings to secure profits. 

Compounding this issue is the recent increase in mining difficulty.

When this heightened difficulty is compared with the reduced fees, it becomes clear that BTC mining has become less profitable, driving miners to liquidate more of their reserves.

As of this writing, Bitcoin is trading at approximately $61,000, reflecting an increase of over 1%. Suppose the price can sustain this upward momentum.

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In that case, Bitcoin Miner profitability may stabilize, providing a more favorable environment for miners amid the current challenges.

Maintaining positive price trends could help offset the recent pressures from increased mining difficulty and reduced fees.