On-chain data shows that bitcoin miners have been engaging in selling recently. Here's why this cohort is doing this, according to a quant.
bitcoin miners have been transferring to exchanges recently
As explained by an analyst at CryptoQuant Quicktake bitcoin-Reserves-Ahead-of-Halving-A-Strategic-Move” target=”_blank” rel=”noopener nofollow”>mailThere has been a significant shift in the bitcoin mining landscape as the cryptocurrency nears its next halving event.
Below is the chart shared by the quant, showing the trend in a few different indicators related to btc miners over the past few years.
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/01/Bitcoin-Miners-Sell-Before-Halving-Quant-Explains-Why.png" alt="bitcoin miners” width=”1280″ height=”515″ data-recalc-dims=”1″/>
The trend in the different miner-related metrics | Source: bitcoin-Reserves-Ahead-of-Halving-A-Strategic-Move" target="_blank" rel="noopener nofollow">CryptoQuant
The first indicator on the chart is the “mining reserve,” which tracks the total amount of bitcoin currently in the combined wallets of all miners.
Changes in this metric can naturally inform us about the moves these chain validators are making right now. As can be seen from the graph, the mining reserve has seen a notable reduction recently.
This trend suggests that miners have been transferring a net amount of coins from their wallets. This could be for several purposes, but selling is certainly a likely option.
One indicator that may perhaps confirm that some selling has indeed occurred is “miner-to-exchange flow,” which measures the amount that miners are transferring to centralized exchanges.
Generally, miners deposit their coins on these platforms for sales purposes. As evident from the chart, this group has seen an increase in these types of transactions recently.
So why have miners recently been engaging in a sell-off? “It is a strategic move,” says the analyst. “Miners typically make a profit before it is halved to cover operating costs and prepare for future investments.”
Halvings are periodic events in which “block rewards” on the bitcoin network are reduced exactly in half permanently. Block rewards refer to the rewards that miners receive for mining blocks on the blockchain and serve as their main source of income.
This means that halvings have a profound impact on the finances of these chain validators. These events are held every four years and the next one will be held in a few months. Once the halving occurs, competition for rewards will obviously intensify.
“To remain competitive in this evolving landscape, miners are forced to invest in new, more efficient mining technologies and equipment,” notes the quant. “Selling a portion of your bitcoin reserves provides the capital needed for these investments.”
Miner liquidation is naturally something that could be negative for the price in the short term. This selling pressure may even be one of the factors explaining why the cryptocurrency's price has struggled recently.
btc Price
bitcoin has enjoyed a 4% rise over the past 24 hours and has now recovered above the $41,000 mark.
<img loading="lazy" decoding="async" class="alignnone size-medium aligncenter" src="https://www.tradingview.com/x/2Mgm78hQ/" alt="bitcoin price chart” width=”1534″ height=”868″/>
The price of the asset seems to have observed a sharp surge during the past day | Source: BTCUSD on TradingView
Featured image by Brian Wangenheim on Unsplash.com, TradingView.com charts, CryptoQuant.com
