Miner sales and the expiry of options contracts on Friday could put further downward pressure on Bitcoin. Where is the bottom?
- Miners sold more BTC than they generated in May.
- Liquidation could drive Bitcoin prices even lower.
- Crypto market faces other price tests. Will it resist?
Amid the general price crash in the crypto market, miners from Bitcoin they are beginning to liquidate their reserves in order to cover their operating costs.
Some of the major crypto mining companies listed on the American stock exchange, such as Digital Marathon Y Riot Blockchainthey sold more bitcoin than they generated last month. According to a report of Arcane Researchminers are liquidating their reserves of Bitcoin to record levels in order to continue production.
“In the first four months of 2022, public mining companies sold 30% of their Bitcoin production. The plummeting profitability of mining forced these miners to increase your sales rate to more than 100% of your production in May”, reads the report, which was quoted by Crypto Briefing.
Miners liquidate their Bitcoin reserves
The research deepens that this increase in outflows of Bitcoin from the wallets of the miners, who are seen as the “hodlers” par excellence, could lead to a further decline in the prices of the flagship cryptocurrency. (It should be noted that the termhodl” refers to the action of holding cryptocurrencies in the long term, a movement that is interpreted in a bullish way).
In short, this means that operating costs outweighed the miners’ profits, forcing them to pull out of their savings from Bitcoin to make up the difference, which could broadly be translated as a bearish sentiment for the market. The analyst of Arcane ResearchJaran Mellerud, highlighted in this regard:
If they are forced to liquidate a sizable portion of these holdings, it could help push the price of Bitcoin down even further.
A recent report of Coin Metrics also highlighted the current trend of sales among miners, as reflected Crypto Briefing. According to that cryptocurrency analytics firm, miners have sold at least $500 million in Bitcoin so far in June, reducing its reserves by almost a third.
The miners’ wallets had accumulated bitcoin throughout 2022, but began to reduce their holdings amid the recent turmoil. However, according to the report, miners still hold close to $2.5 billion in Bitcoin.
The reports coincide with the miner’s recent announcements Bitfarmsbased in Toronto, Canada, which reported this week that it had sold 3,000 BTC of its reserves, valued at just over $60 million, to reduce its debt and increase its liquidity.
Bearish pressure, miners in trouble
Meanwhile, beyond liquidations, other metrics also point to miners potentially facing significant difficulties amid falling prices.
In accordance with Crypto Briefingthe indicator data Bitcoin Hash Ribbonswhich measures the network’s 30-day and 60-day hash rate moving averages, also suggest that BTC miners are turning off their machines as they start to cost more to run than they can earn back with block rewards.
With Bitcoin struggling to stay above $20,000, miner earnings are falling well below last year’s highs. According to data from Blockchain.com Block earnings, which started the year at around $50 million and dipped to just under $40 million in early May, sank to as low as $16 million last week.
Lower revenues for miners could create a vicious cycle for the ecosystem, putting the price of mining even more at risk. Bitcoin; in the end, if miners fail to cover their expenses with the block reward, this would force them to sell more of their reserves, sending downward signals to investors and potentially sinking prices further.
Bears put Bitcoin to the test
This 2022, the cryptocurrency market has been determined by a general bearish trend that responds to multiple factors. The price movements of digital assets have been highly correlated with the US markets, which have responded negatively to inflation reports and the aggressive policies of the Federal Reserve (FED) to increase interest rates.
After hovering around the $30,000 level for much of the year, Bitcoin slipped below $18,000 last week, wiping out more than two years of gains, amid rumors of insolvency of the reputed crypto hedge fund Three Arrows Capital and the cryptocurrency lender Celsius.
Fears of a possible broader liquidity crisis in the market seem to continue to put downward pressure on prices; though Bitcoin it has managed to recover slightly and remains around USD $20,400 at the time of publication.
Many wait for the arrival of a bullish catalyst that can release Bitcoin from its current depressed price range. However, the bottom may not have arrived yet. how to pick up Cointelegraphit is likely that the Flagship cryptocurrency faces another challenge tomorrow, with the expiration of $2.25 billion monthly options contracts.
In the meantime, some analysts have signaled that the bottom may not be far off, estimating a drop to $15,000 levels. Among them, Ki Young Ju, CEO of on-chain analytics platform CryptoQuantsaid in a tweet that the indicators suggest that Bitcoin has already touched its lowest level, although others they do not rule out the possibility of it falling to USD $10,000.
At this stage, no one can say for sure whether BTC will hold this range or drop back to sub-$10k price levels, but I would be foolish not to have a plan for that possibility.
At this stage, nobody can say with certainty whether #BTC will hold this range or if it will go to sub $10k price levels ever again, but it would be foolish not to have a plan for that possibility. “Never” doesn’t age well in #crypto. Plan accordingly. https://t.co/iCsO8yQgDB pic.twitter.com/8WoLYJQqvG
— Material Indicators (@MI_Algos) June 22, 2022
Article by Hannah Estefanía Pérez / DailyBitcoin
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