The cryptocurrency market has recently encountered substantial selling pressure, causing major altcoins to plummet below critical support levels. Despite an increase in accumulation within Spot Bitcoin ETFs, the elevated selling pressure signals heavy asset liquidation by numerous holders.
What Impact Do Bitcoin Miners Have?
Bitcoin briefly soared past $71,000, and the SEC approved the spot Ethereum ETF, fueling optimism about a new all-time high. However, these hopes were dashed when Bitcoin’s price saw a sharp reversal, triggering a strong downward trend.
The emergence of significant bearish candles overpowered buying pressure, driving Bitcoin out of its upward momentum. This led many to speculate that Bitcoin might soon reach a much-discussed bottom below $60,000.
Why Are Miners Selling Bitcoin?
Despite recent record-level inflows from institutional investors, the source of Bitcoin’s selling pressure remains a topic of great interest. Experts attribute this primarily to miner capitulation. Bitcoin has been consolidating in a range for over 100 days, likely causing a rare miner capitulation phase, especially after the last block reward halving.
The average production cost for miners has exceeded $75,000 per BTC, while the spot price has dipped below $67,000. This price gap has likely compelled miners to liquidate their holdings, reducing their balances to their lowest levels in 6 to 8 months.
Key Takeaways for Investors
– Miners are selling BTC due to the rising production cost exceeding market price.
– Following the block reward halving, miner balances have dropped significantly.
– Over 1,200 BTC were sold recently, impacting market resistance at $71,800.
Data from Glassnode indicates a continuous decline in Bitcoin miner balances, reaching the lowest levels in recent years with increased sales following the fourth block reward halving in April 2024. Miner balances dropped from 1.84 million BTC at the beginning of 2023 to 1.8 million BTC as of May 2024. This trend suggests that miners are selling BTC to cover operational costs post-reward reduction.
Bitcoin miners recently offloaded over 1,200 BTC (around $80 million), which significantly contributed to the recent price correction, preventing the rally from breaking the crucial resistance at $71,800. Fortunately, this capitulation phase seems to be nearing its conclusion, potentially setting the stage for a new bullish phase.
While the end of the miner capitulation phase is encouraging, whether Bitcoin can overcome the current resistance and achieve new highs remains uncertain. The market’s response in the coming days will be critical in determining Bitcoin’s next price trajectory.
