- Bitcoin miners added selling pressure to BTC as halving approaches.
- Grayscale’s Bitcoin outflows continued to rise.
Bitcoin’s [BTC] price was stuck at the $40,000 point for quite some time after its correction. The prolonged stagnation led skeptics to anticipate a potential decline in BTC’s value. In the short term, miners may contribute to Bitcoin’s correction.
Miners play it safe
Approaching the highly anticipated Bitcoin halving, a shift was observed in the Bitcoin mining sector.
Recent data indicated a substantial decrease in miners’ Bitcoin reserves, accompanied by an increase in BTC transfers to exchanges. The flow from miners to exchanges surpassed exchanges to miners by threefold, signaling significant selling pressure from the mining community.
The rationale behind miners liquidating their reserves is strategic.
Typically, miners capitalize on profits before a halving event to cover operational expenses and facilitate future investments. This strategy becomes increasingly crucial as competition in Bitcoin mining escalates with each halving, where the block reward is halved, reducing miners’ income unless the Bitcoin price rises proportionally.
To stay competitive, miners must invest in advanced, more efficient mining equipment and technologies. Liquidating a portion of their Bitcoin reserves provides the capital necessary for these strategic investments.
This trend is of paramount importance for investors and market analysts to monitor, as heightened selling pressure from miners could impact the coin’s short-term price.
Miners Selling Bitcoin Reserves Ahead of Halving – A Strategic Move
“In fact, the flow of #Bitcoin from miners to exchanges is now three times higher than the movement from exchanges to miners. This trend signals a strong selling pressure from the mining community.”
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— CryptoQuant.com (@cryptoquant_com) January 25, 2024
State of BTC
At press time, BTC was trading at $39,907.84. The volume at which it was being traded had fallen significantly from 31 billion to 18 billion.
Additionally, the number of BTC holders also plummeted over the last few days. These factors may play a big role in the decline of BTC’s price going forward.
Source: Santiment
Apart from the behavior of miners, the behavior of institutions can also affect BTC’s price.
Read Bitcoin’s [BTC] Price Prediction 2024-25
According to recent data, Grayscale’s BTC spot ETF GBTC had a net outflow of $394 million on 25th January, with a single-day trading volume of $502 million.
Net outflows slowed slightly over 3 trading days and at press time, Grayscale ETF’s cumulative net outflows reached US$4.079 billion. It still held US$20.028 billion in net assets at the time of writing.