Bitcoin (BTC) miners are increasingly changing their historical BTC holding strategies as the bear market prevails. Notably, miners who are known to accumulate Bitcoin and act as a market buffer are offloading their haul at alarming rates.
In particular, at Bitcoin’s current price, the Bitcoin Miner Sell Pressure tracker indicates an extraordinary selling activity from miners, which is denoted by the color red. The selling rate is ‘almost’ higher than compared to five years ago, data by presented by founder of Capriole, Charles Edward, on November 11 indicates.
Implications of increased miner selling pressure
The Bitcoin miner selling pressure partly points to the reality of the crypto market correction. Notably, amid dropping Bitcoin prices, miners have been operating in a high inflationary environment with the global economy weakening. Therefore, the selling trend can be attributed to an initiative to cover operational costs like electricity payments.
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In previous years, some miners have been known to hoard the asset awaiting the price to rally, while others take out loans to finance operational expenses. At the same time, miners tend to sell more when they also lose money.
Although miners might have built a reputation of being bullish even when bearish conditions prevail; hence the selling rate is likely to send shockwaves.
In general, the crypto winter has hit the mining business hard, with publicly listed companies reportedly going bankrupt, leaving them with no choice but to sell the BTC. For instance, a previous report indicated that miners had been forced to sell their equipment at a discount after being rendered unprofitable.
Furthermore, analysts have projected that if Bitcoin prices continue to plunge, the fate of Bitcoin mining will be in trouble. As reported by Finbold, Frank Holmes, CEO of investment firm U.S. Global Investors suggested that if Bitcoin hits $12,000, mining could shut down globally.
Impact on Bitcoin’s price
Although increased miner selling reflects the general status of the market, the trend has historically been used as a precursor to a possible upside movement in Bitcoin’s value. In this case, the metric usually points to a potential bottom.
Bitcoin is still attempting to find a bottom after correcting further below $20,000. The asset breached $20,000 as the market tried to adjust to the FTXcrypto exchange debacle. By press time, the asset was trading at $16,500.
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