- Bitcoin miners are selling their digital assets to hedge against the upcoming halving.
- Bitcoin offloading is contributing to the post-ETF price slump, according to Bitfinex analysts.
Bitcoin miners are offloading digital assets in preparation for the upcoming “halving,” when rewards will be cut in half.
Analysts note that this selloff contributed to Bitcoin’s recent price decline, despite talk of the approval of a physical Bitcoin exchange-traded fund in January.
“The largest outflow from a miner wallet ever recorded”
The price of Bitcoin rose to a two-year high of $49,000 on January 10th after the Securities and Exchange Commission approved 11 spot Bitcoin ETFs.
However, the temporary spike disappeared, and the stock fell 12% to about $42,700.
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Analysts at cryptocurrency exchange Bitfinex wrote in a new report this week that miners “used the rise in Bitcoin prices as a catalyst to exit or leverage their positions.”
On February 1, analysts said that approximately $577 million had been leaked from miner wallets, marking the “largest outflow from a miner wallet ever recorded, and further sell-off could be imminent.” It hints at sexuality.”
Bitcoin miner reserves have decreased to 1.8 million Bitcoins, worth over $78.3 billion. This is the lowest level since June 2021, Bitfinex wrote.
This indicator measures the Bitcoin held by miners and shows the supply they have accumulated but not sold.
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According to Bitfinex, miners typically use the sales proceeds to upgrade their infrastructure in anticipation of the upcoming Bitcoin halving.
The next halving is expected to occur in April. A Bitcoin miner’s reward for confirming a new block on the network will decrease from 6.25 Bitcoin to his 3.125 Bitcoin.
Past halvings preceded bull markets, as declining rewards create new shortages. Analysts at JPMorgan said in September that the cut in compensation would raise production costs and create a so-called price floor.
The investment bank estimates that the price of Bitcoin after the halving will trade above $40,000, as miners are only willing to sell at this level or above.
Additionally, Bitcoin mining efforts are challenged by Bitcoin’s so-called hash rate, or the amount of computing power used per second, which has increased at the same time as the cryptocurrency’s price, Coinbase analysts said. stated in a recent report.
This means that miners’ profits have barely moved, even as Bitcoin has soared above the cryptocurrency’s winter lows.
“The rise in hashrate has likely absorbed most of the upside from the rise in Bitcoin prices,” said Coinbase analyst David Hung.
Virtual currency market movements
- Bitcoin has fallen 0.7% since Monday to over $42,700.
- Ethereum fell 0.12% to trade below $2,320.
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Sebastian Sinclair is DL News’ markets correspondent. Any tips? Please contact Cebu: email@example.com.