Bitcoin Miners Are Not Selling Off Their Reserves, Data Shows
Contrary to some reports, Bitcoin miners are not dumping their reserves in the market, according to on-chain data from CryptoQuant. The data shows that the amount of Bitcoin held by miners has only decreased by 12,755 BTC since November 28, 2023, which is a negligible fraction of the total supply.
Some media outlets and analysts have claimed that miners are selling off their Bitcoin holdings to cope with market headwinds, such as falling prices, rising energy costs, and increased competition. However, CryptoQuant’s data suggests that these claims are unfounded and based on misleading interpretations of miner flows.
Miner flows are the movements of Bitcoin from miner wallets to exchanges or other destinations. While some outflows may indicate selling pressure, they do not necessarily reflect the net change in miner reserves. To get a more accurate picture, one has to also consider the inflows, which are the movements of Bitcoin to miner wallets from other sources.
CryptoQuant’s data shows that while there have been some large outflows from miner wallets in recent months, there have also been substantial inflows that offset these movements. For example, on January 15, 2024, there was an outflow of 2,000 BTC from a miner wallet, but on the same day, there was an inflow of 2,500 BTC to another miner wallet. This means that the net change in miner reserves was actually positive by 500 BTC on that day.
The data also shows that the total amount of Bitcoin held by miners has remained relatively stable since the third halving in May 2020, which reduced the block reward from 12.5 BTC to 6.25 BTC. The halving was expected to put pressure on miners to sell their reserves to cover their costs, but the data indicates that most miners have been able to adapt and sustain their operations without liquidating their holdings.
According to CryptoQuant, the current level of miner reserves is 1,833,222 BTC, which is only 0.69% lower than the level on November 28, 2023, which was 1,845,997 BTC. This difference of 12,755 BTC is equivalent to only 0.07% of the total supply of Bitcoin, which is currently 18,635,000 BTC. Therefore, the impact of miner selling on the market is negligible and does not explain the recent price volatility of Bitcoin.
CryptoQuant’s CEO, Ki Young Ju, explained the difference in a tweet on January 29, 2024. He said that CryptoQuant tracks miner flows based on the actual wallets that belong to miners, while other platforms use heuristics and assumptions to identify miner wallets. He said that CryptoQuant’s data is more accurate and reliable, as it does not include false positives or false negatives.
He also said that CryptoQuant’s data shows that miners are not selling their reserves, but rather transferring them to other wallets for various reasons, such as security, custody, or lending. He said that these transfers do not affect the market, as they do not involve exchanges or other buyers.
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