Miners’ Outflow and Bullish Overviews

  • February 10, 2024

Bitcoin miners are offloading their holdings to raise capital to support increased mining and infrastructural facilities. Bitfinex Alpha has shared its latest report, highlighting the attributes of the recent price drop. The primary reason behind the price pullback is the selling of bitcoin by miners before the upcoming halving event in April 2024.

The selling activity is materially affecting market liquidity and price discovery.

Recent Highlights in the BTC Miners’ Outflow and Reserve

After the approval of spot BTC ETF by the SEC, on the second day of ETF approval, that is January 12, bitcoin miner reserves dropped significantly. In dollar terms, the total Bitcoin miners’ outflow to exchanges increased by $1 billion. That is the highest mining outflow in the last six years.

Moreover, the last week of January witnessed a net outflow of 3,500 Bitcoins in a single trading day, recorded through the miner wallets. It is the highest level observed in the last nine months, starting in May 2023. 

Thus, the Bitcoin Miner Reserve has been reduced to 1.83 million bitcoins, marking the lowest point in the three years since June 2021.

Impact of Bitcoin Halving

The upcoming Bitcoin halving event will reduce Bitcoin rewards issued to miners and thus decrease miner profitability. Thus, this selling activity is supposed to create a capital base for the required upgrades in infrastructure, such as machinery and mining facilities.

Importance of Bitcoin Halving

As per the report by Charles Schwab, the central banks of all the major countries across the world are dedicated to cutting interest rates in 2024. The Fed Reserve is believed to forerun the trend and thus force the dollar to fall continuously at a moderate rate. The reason for the moderate fall is the shrinkage in yield differences between the USA and other countries.

Analysts, who worked on the Bitfinex report, have noted that a weak dollar leads to a rise in miner profits and vice versa. These developments changed the views of social media observers to a bullish outlook. One of the social media observers highlights the next “bull leg” to begin once the dollar rolls over again.

Pentoshi euroPeng, an X user, has historically stated that, based on his observation, the year following a Bitcoin halving event generally experiences a blow-off top, recommending that a peak might be observed in 2025. He further added that it is challenging to maintain a bearish outlook when looking at historical trends.

Source: Pentoshi euroPeng, Twitter Account (X account)

Organizations Getting Affected by Bitcoin Events

Looking at the price movements in the stock prices of various companies involved in the crypto markets during the approval of the BTC ETF. Analysts are expecting Bitcoin halving to again affect the organizations and their share prices. 

The organizations that are highly expected to be significantly affected include Marathon Digital (MARA), Riot Platforms (RIOT), Hut 8 Mining (HUT), BlackRock (BLK), Invesco (IVZ), Terrawulf Inc. (WULF), Hive Digital Technologies Stock (HIVE), and others working in the industry.

Source: https://www.thecoinrepublic.com/2024/02/09/bitcoin-halving-trends-miners-outflow-and-bullish-overviews/

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