Bitcoin (BTC) has been struggling to benefit from a positive macroeconomic environment that has led to significant gains in equities. Analysts attribute this lackluster performance to an oversupply situation caused by continued selling pressure from BTC investors and miners. However, there are indications that this trend may be changing as the volume of BTC transferred from miners’ wallets has significantly decreased, suggesting a potential stabilization in the market. This development is seen as a positive sign for Bitcoin’s price, and there is optimism that the cryptocurrency may soon resume its upward trajectory.
Since the Bitcoin halving in April, miner revenue has been cut in half, leading older mining machines to become economically inefficient. To cope with increasing operational costs, miners have been forced to sell their Bitcoin holdings through over-the-counter transactions and in the open market. While the crypto market has been adjusting to this increased selling pressure, the frequency and volume of bitcoins moving out of miners’ wallets have started to decline. This reduction in miner selling pressure is seen as a promising sign for a potential market rally once the selling volume is fully absorbed.
Market participants have observed historical patterns that suggest old miners’ buying and selling patterns can impact prices. Bitfinex analysts have identified previous miner sell-offs that have affected market prices from May to September 2023 and December 2023 to January 2024. During these periods, Bitcoin experienced upward movements once the selling pressures diminished. The current drawdown in hashrate levels, similar to those seen during the 2022 bear market lows, indicates that the peak of mining selling pressure may have passed, with weaker miners already capitulating to the market.
Despite the decrease in miner selling pressure, other factors such as large-scale selling by long-term holders and recent offloading of BTC by the German government and Mt Gox continue to influence the market. This, coupled with profit-taking by other long-term Bitcoin holders, suggests that the near-term outlook for BTC remains vulnerable and could lead to increased volatility. It is important to note that while the decline in miner selling pressure is a positive development, there are still supply overhangs that could impact Bitcoin’s price in the short term.
Overall, the recent decrease in miner selling pressure has sparked optimism among market participants who believe that Bitcoin may soon resume its upward trend. The historical patterns observed by Bitfinex analysts suggest that once selling pressures from miners diminish, Bitcoin tends to experience positive price movements. While other supply overhangs may still pose a challenge in the near term, the reduction in miner selling pressure is seen as a step in the right direction for Bitcoin’s price stability. As the market continues to absorb the selling volume, there is hope that Bitcoin could see a resurgence in the coming weeks.
