Analysts at crypto exchange Bitfinex have attributed the plunge in BTC’s price to Bitcoin miners who leveraged the asset’s recent rally to make a profit.
According to the latest edition of the Bitfinex Alpha report, the BTC reserves of miners have reduced significantly as they have embarked on a selling spree, seeking to provide capital and upgrade infrastructure in preparation for the upcoming Bitcoin halving event.
Miners on Selling Spree
Bitfinex said miners used BTC’s run-up to $49,000 following the approval of spot Bitcoin exchange-traded funds (ETFs) in the United States as a catalyst to exit or leverage their positions. This was seen in miner BTC reserves dropping shortly after the ETF announcement from the Securities and Exchange Commission (SEC).
As BTC hovers around $42,800, the Bitcoin Miner Reserve, a metric reflecting the amount of BTC held in wallets associated with miners, has fallen to its lowest point since June 2021. Bitcoin miners’ holdings currently sit at 1.826 million BTC. Since the metric represents the portion of Bitcoin supply that miners are refraining from selling, the decline suggests that they are either offloading their assets or leveraging them to raise capital.
On-chain data shows that miners sent over $1 billion worth of BTC to exchanges on January 12, the second trading day for the new Bitcoin ETFs, representing a six-year high in miner outflow. Miner wallets also recorded an outward movement of 13,500 BTC on February 1, marking the highest negative outflow since the Bitcoin Miner Reserve was created.
“With the next Bitcoin halving event expected to take place in April 2024, which will mean that Bitcoin miners will receive 50 percent less revenue for each block they mine going forward, miners seem to be selling their holdings of BTC to finance the purchase of more efficient mining rigs,” Bitfinex said.
Long-Term Holders Remain Steadfast
As Bitcoin miners sell their assets to fund operational costs, the majority of long-term holders have remained steadfast and adamant in their positions, reluctant to offload their holdings at current market prices.
“This trend of holding, especially among long-term investors, reflects a continued belief in the future appreciation of Bitcoin,” the crypto exchange stated.
However, Bitfinex analysts noticed a slight increase in the spending of older BTC, particularly among holders in the one to two-year category. The exchange said such has historically preceded potential market tops.