The current influx of bitcoins from miners to exchanges is three times greater than the movement in the opposite direction, indicating strong selling pressure. On January 25, the online analytics provider CryptoQuant reported that miners strategically selling Bitcoin reserves before the halving was a tactical move likely to amplify selling pressure.
More Info on BTC: Bitcoin Whales have Accumulated a Whopping $3 Billion in January
Bitcoin Mining’s Shift: Rising Selling Pressure as Halving Approaches, Analysts Say
Sell Bitcoin pressure market is growing, and miners are adding to it in what’s been described as a “strategic move.” According to analysts, these savvy miners will likely continue to increase asset sales to cover expenses as the next Bitcoin halving draws near.
Data within the network indicates a noticeable decline in the Bitcoin reserves owned by miners. Moreover, there’s also an increase in BTC transfers to centralized exchanges. It stated:
In fact, the flow of bitcoins from miners to exchanges is currently three times greater than the flow of bitcoins from exchanges to miners. This trend signals a strong push from the mining community.
Bitcoin Miner Reserves
The Bitcoin miners’ reserves currently stand at 1.83 million BTC, which is approximately $73.4 billion. These reserves have been declining since the end of October when the selling phase began.
Miners, being the savvy financial maestros they are, usually take profits before the much-anticipated halving event to cover operating costs and prepare for future investments. According to CoinGecko, the halving will occur in 87 days, around April 22 – mark it on your crypto calendars.
Furthermore, the reward for mining a block is reduced to 3,125 coins, which significantly reduces miners’ income unless Bitcoin’s price increases proportionally.
To keep up with the expanding competition, Bitcoin miners must be on a perpetual quest for more efficient equipment. So, selling a portion of some BTC reserves becomes the miners’ way of financing these overhead costs and investments. CryptoQuant pointed out:
The increasing pressure from Bitcoin miners could impact the price of Bitcoin in the short term.
BTC Surges Past $40,000 Amidst Intensified Selling and Grayscale’s Massive 106K Bitcoin Offload Post-ETF Approval
The U.S. government plans to auction off over 2930 BTC worth around $130 million, seized in the Silk Road case. Adding to the selling pressure is the exodus of funds from the crypto asset management giant, Grayscale.
Since January 11, when Grayscale received permission to convert its GBTC fund into a spot Bitcoin ETF, the funds’ outflow has been more than $3.3 billion. They’ve also listed a large amount of Bitcoins on Coinbase, preparing for further sales.
The reason for Grayscale’s outflow is largely due to investors rebalancing their portfolios and entering into funds with lower fees for extra profit.
According to their website, the Grayscale Bitcoin Trust owns 536,694 BTC, worth approximately $21.3 billion. GBTC has lost 13% of its circulating shares, but the sell-off is unlikely to be over yet. Nonetheless, a lower BTC price will be good news for other ETF issuers and investors eagerly waiting to buy the dip.
ETF analyst Eric Balchunas conducted a poll to figure out when people think Grayscale will finally stop selling:
GBTC has bled 13% of its shares outstanding. How high do you think that number gets before the mass exodus stops?
Almost half of the respondents voted for the option 35%-50%, suggesting that the bearish vibes might hang around for a bit. He added that both he and his colleague analyst, James Seyffart, believe this number is around 25%.
Bitcoin is Making a Comeback
On January 23, Bitcoin prices fell below $40,000, hitting an intraday low of $39,494 during the Asian morning trading session on Tuesday. However, despite the market pressure from both Grayscale and the miners, BTC prices have returned to the psychological level of $40,000. At the time of writing, Bitcoin is trading around $43,450.
Despite the outflow of funds from the Grayscale Bitcoin Trust, according to CC15Capital, a whopping 27,717 BTC have been purchased since the launch of the ETF. That’s the same as getting roughly $1.1 billion at today’s prices.
There’s no Bitcoin pullback in sight because the upcoming halving, which will cut the already limited new supply of BTC in half, will limit the negative impact.
More on Bitcoin from HODL FM:
- Bitcoin: A Potential Game-Changer for Western Civilization, Says Coinbase CEO
- SEC’s Potential Approval of 12 Spot Bitcoin ETFs Creates Excitement and… Speculation
- From Bitcoin Prophets to Walmart Penguins – Crypto Predictions, Influencer Dramas, Regulatory Showdowns, and Retail NFTs
With 19.6 million BTC already strutting their stuff in circulation, this creates a supply shock. However, prices typically change in about six months after the halving, so don’t expect an instant increase.
Disclaimer: All materials on this site are for informational purposes only. None of the material should be interpreted as investment advice. Please note that despite the nature of much of the material created and hosted on this website, HODL FM is not a financial reference resource and the opinions of authors and other contributors are their own and should not be taken as financial advice. If you require advice of this sort, HODL FM strongly recommends contacting a qualified industry professional.
