As crypto miners sell off their stashes of Bitcoin ahead of the upcoming Bitcoin halving, the number of BTC they hold has dropped to the lowest level since July 2021. When the Bitcoin halving occurs, the revenue they earn per mined block will drop in half.
They started selling off in October 2023
According to Glassnode data cited by CoinDesk, the estimated number of Bitcoins held in wallets miners controlled has dropped to 1,812,482 BTC by more than 8,000 BTC since the beginning of 2024. In October, miners held over 1.83 million BTC, and that’s when the decline in holdings began. The amount sold off this year alone was worth $530 million.
Miners generate valid blocks to add transaction records to the blockchain. They receive new coins with each block that is mined as a reward for the work. They also get transaction fees. Once all 21 million Bitcoins have been mined, there will be no more Bitcoin halving, and miners will only be rewarded in fees.
Miners are investing in better equipment
Currently, miners get 6.25 BTC per block mined. After the Bitcoin halving in April, the reward will drop by 50% to 3.125 BTC. According to the crypto platform FRNT Financial, miners might be selling Bitcoin to buy higher-quality equipment and improve profitability, which will reflect on mining stocks.
Miners might also be selling to improve their positions ahead of the Bitcoin halving. Buying more efficient mining equipment is part of the plan.
Experts widely perceive the Bitcoin halving as a stress test for miners. It is expected to raise production costs and reduce revenue at the same time.
Dry season in China
Another reason for the Bitcoin sell-off by miners could involve the extensive dry season in southwest China, which typically runs from October to March/April. Although Bitcoin mining is illegal in China, the country accounts for roughly a fifth of the total computing power on the blockchain.
When hydropower becomes plentiful in wet seasons, miners in some Chinese regions are known to bring additional hardware online. They might sell off in the dry season to compensate for the inactivity of mining hardware.
Will there be a new all-time high before Bitcoin halving?
As Bankless Times predicted, Bitcoin’s bull run continued after it peaked at $52,000 around ten days ago. Will there be a new all-time high in the near term? According to our analysis, a correction is expected after the Bitcoin halving, and there won’t be a new ATH before next year.
Price correction or a consistent rally?
Some experts warn that high funding rates and Bitcoin’s market structure are signs of heavy leverage use, and there will be mass liquidation eventually, resulting in a price correction. Some expect this to happen even before the Bitcoin halving.
According to options analysts cited by Cointelegraph, the price move is not overextended. They expect the flagship crypto to keep rallying. Bitcoin showed relative strength when it broke through $53,000. There was natural demand, trading volumes were high, and there was lots of momentum trade.
Bitcoin bulls are pointing out that the crypto’s relative strength index (RSI) is above 70 and drawing attention to the fact that its price upswing continued for almost a year when the RSI was at that level in previous market cycles. The role of Bitcoin halving in RSI was not discussed, but it is likely contributing to the strong index.
What does the recent crash mean?
Bitcoin recently peaked at $64,000, then crashed to $58,700, likely due to clearing out long positions and a sell wall at this level. However, the first crypto recovered thereafter.
Bitcoin is currently trading for just under $63,000, slightly off from its all-time high in November 2021. Many investors expect it to overtake its record price of $68,900 before the Bitcoin halving, which is scheduled to take place in less than two months.
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