Bitcoin miners sell more than 10,000 BTC within 24 hours, marking the biggest decline in over a year.
Bitcoin miners experienced a significant decline in their reserves on January 17, with over 10,000 Bitcoin being sold. This represents the largest daily decrease in reserves in over a year, according to data from CryptoQuant, an on-chain analytics firm. The value of these sold coins amounts to approximately $450 million.
Typically, miners alternate between hoarding and selling Bitcoin. A report from Bitfinex last year revealed that miners had been accumulating Bitcoin since mid-2023, when prices and profitability were not as favorable. However, with recent price increases and improved profitability, miners have shifted towards selling their Bitcoin. These sales are often done to boost cash flow or take advantage of higher prices during market rallies. Currently, Bitcoin’s price is hovering between $42,000 and $43,000.
Furthermore, Bitcoin miner reserves have reached their lowest point since July 2021, with a total of 1.83 million coins remaining. Despite the decline, this still represents a significant value of approximately $78 billion.
In addition to the decrease in miner reserves, there has also been a decline in Bitcoin’s hashrate, which is the measure of the computational power used in mining. This decrease is partly due to miners redirecting power to the grid during severe winter storms in the USA. This is done to support essential services and household heating needs. Bitcoin’s hashrate has dropped from a high of 629 EH/s to 414 EH/s, a reduction of 34%. The decrease is attributed to electricity usage restrictions imposed by the Electric Reliability Council of Texas (ERCOT) due to the harsh weather conditions.
Despite the increased selling by miners, Bitcoin’s price has remained relatively stable. This resilience may be attributed to significant inflows into Bitcoin ETFs, with nearly $900 million being invested in the first four days since their launch. These inflows could be driving strong Bitcoin purchases in the open market.
On the other hand, stocks of Bitcoin mining companies have not performed as well, underperforming after a strong rally in 2023. However, a recent research report from Bernstein suggests that the current weaknesses in mining stocks may present an investment opportunity. The report highlights two main challenges for these stocks following the approval of spot Bitcoin ETFs: reduced investor interest in using them as a proxy and the potential impact of lower Bitcoin prices leading to further underperformance.
In conclusion, despite the decline in miner reserves and hashrate, Bitcoin’s price has remained stable, possibly due to inflows into Bitcoin ETFs. While mining stocks have faced challenges, there may be investment opportunities amidst the weaknesses.
