Bitcoin Miners Contributing To BTC Crash? New Report Sheds Light
June 23 2022 - 1:00PM
NEWSBTC
Bitcoin remains in the red with a 10% loss over the past week. The
number one crypto by market cap has been consolidating at its
current levels after a massive crash too it to a multi-year low of
$17,500. Related Reading | Are Small Cap Crypto Assets
Rebounding A Sign Risk Appetite Returning? At the time of writing,
BTC’s price trades at $20,400 with sideways movement in the last 24
hours. As many outlets have been reporting, Bitcoin miners have
been reducing their BTC holdings. This has contributed to the
selling pressure and to BTC’s price plunging to its current levels
from the $30,000 area. A recent report by analytics firm Coin
Metrics looked into BTC miners’ addresses, and funds flow to pin
down Bitcoin’s crash real impact on the sector. As the firm claims,
the process of tracking down BTC miners’ addresses can be
difficult, despite the transparency of the blockchain. In order to
get a clear picture of current miners’ BTC holdings, Coin Metrics
labeled the addresses which have come in contact with mining pools.
These miners combined their resources and split the rewards for
including a block in the blockchain. Miners pool their resources
because they have a bigger chance of receiving the rewards. These
pools interact with BTC addresses which Coin Metrics called 0 Hop
miners and then the split rewards go to 1 Hop address or miners. As
seen below, the firm was able to discover that there are 2.9
million 1-hop miners, but this is the total number of addresses for
every entity that has ever mined 1 BTC. The number has been on a
decline since January 2021 when the sector became more
industrialized. In that sense, active Bitcoin miner addresses
interacting with the mining pools total 34,000 in 2022. A much
smaller number when compared to its all-time high, and with 2021
when these addresses stood at 92,000. Bitcoin Miners Reduce
Holdings, But Remain Bullish The total number of 1-hop BTC
addresses have been dumping their Bitcoin since July 2020. This
metric inversely correlates with the price of BTC. While the
cryptocurrency rose, the BTC supply held by these addresses trended
to the downside. These entities have sold at least 500,000 BTC from
that period until June 2022 impacted by price volatility. As seen
below, active miners have been reducing their supply as well but
only sold around 25,000 BTC. Coin Metrics analyst Parker Merritt
added the following to the recent findings: While most miners
prefer HODLing, last week’s market turbulence threw many miners for
a loop. With the wick down below $18K, several companies became
forced sellers, liquidating their BTC treasuries to minimize the
impacts of a margin call. Related Reading | Controlling The
Chaos: Alameda Ventures Bails Out Voyager With $200M & 15K BTC
There is an uptick on the chart above, which could translate into a
new period of BTC accumulation from miners. Overall, less leverage
in the crypto market could contribute to healthier price action.
Bitcoin (COIN:BTCUSD)
Historical Stock Chart
From Mar 2024 to Apr 2024
Bitcoin (COIN:BTCUSD)
Historical Stock Chart
From Apr 2023 to Apr 2024