Bitcoin Price Correction: How Much Did Miners Sell?

Bitcoin, the world’s leading cryptocurrency, has experienced a significant price correction in the past few weeks, dropping from a high of over $49,000 to below $42,860 at the time of writing. Many analysts and investors have attributed this decline to the selling pressure from the Grayscale Bitcoin Trust (GBTC), a popular investment vehicle that holds a large amount of Bitcoin.

However, a closer look at the data reveals that another factor may have played a more important role in the price movement: the selling pressure from Bitcoin miners. Miners are the entities that secure the Bitcoin network and generate new Bitcoins through a process called mining. They also have the power to sell or hold their Bitcoins, depending on their financial and operational needs.

According to the data from CryptoQuant, a blockchain analytics platform, the Bitcoin holdings of ETF Management Companies, which include GBTC and the newly approved Bitcoin spot ETFs, have increased by 35.9K BTC since the approval of the first Bitcoin spot ETF on October 19, 2021. This suggests that the demand for Bitcoin from these institutional investors has outweighed the supply from GBTC redemptions.

Source: CryptoQuant

On the other hand, the data also shows that the Bitcoin holdings of miners have decreased by about 3,000 BTC in the same period, indicating that miners have been selling more than they have been mining. Moreover, the total amount of Bitcoin sent from miners to exchanges has increased significantly since the approval of the spot ETF, reaching a peak of over 4,000 BTC on November 10, 2021. This implies that miners have been taking advantage of the high prices to cash out their Bitcoins and cover their operational costs.

Source: CryptoQuant

Therefore, based on the data, we can conclude that the recent Bitcoin price correction is more likely to be influenced by the miner selling pressure than the GBTC selling pressure. However, this does not mean that the Bitcoin price will continue to decline in the long term. Historically, miners have tended to sell more Bitcoins in the run-up to the halving, an event that occurs every four years and reduces the Bitcoin mining reward by half. This is because they need to secure their profitability before the halving reduces their income. However, after the halving, the supply of new Bitcoins decreases, creating a scarcity effect that drives the price up. The next halving is expected to happen in 2024, and until then, miners may continue to sell some of their Bitcoins to stay afloat. But once they stop selling, the Bitcoin price may resume its upward trend and reach new highs.

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