Bitcoin miners contributing to BTC crash? New report sheds light
Bitcoin remains in the red with a 10% loss in the past week. The number one cryptocurrency by market cap is consolidating at current levels after a massive crash, reaching a multi-year low of $17,500.
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At the time of writing, the price of BTC is trading at $20,400 with sideways movements in the last 24 hours.
BTC is moving sideways on the 4-hour chart. Source: BTCUSD trading summary
As many outlets have reported, Bitcoin miners have reduced their BTC holdings. This has contributed to the selling pressure and the price drop of BTC to its current level of the $30,000 area.
A recent report by analytics firm Coin Metrics looked at the addresses of BTC miners and the flow of money to determine Bitcoin’s real impact on the industry. As the company claims, despite the transparency of the blockchain, the process of tracking down the addresses of BTC miners can be difficult.
To get a clear picture of the current mining BTC holdings, Coin Metrics has labeled the addresses that have come into contact with mining pools. These miners combined their resources and distributed the rewards for including a block in the blockchain.
Miners pool their resources because they have a higher chance of receiving the rewards. These pools partner with BTC addresses Coin Metrics called 0 Hop miners and then the split rewards go to 1 Hop address or miners.
As seen below, the company 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 declining since January 2021, when the sector became more industrialized.
Source: Coin Statistics
In that sense, in 2022 there were 34,000 active Bitcoin miner addresses interacting with the mining pools. A much smaller number compared to the all-time high, and by 2021 when these addresses reached 92,000.
Bitcoin Miners Reduce Their Holdings, But Remain Bullish
The total number of 1-hop BTC addresses has been dumping their Bitcoin since July 2020. This stat inversely correlates with the price of BTC. As the cryptocurrency rose, the BTC supply from these addresses tended to decline.
These entities have sold at least 500,000 BTC from that period to June 2022, impacted by price volatility. As can be seen below, active miners have also reduced their supply, but only sold about 25,000 BTC.
Source: Coin Statistics
Coin Metrics analyst Parker Merritt added the following to the recent findings:
While most miners prefer HODLing, last week’s market turbulence caused many miners. With the fuse under $18K, several companies became forcible sellers, liquidating their BTC treasuries to minimize the impact of a margin call.
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There is an increase in the above chart, which could translate into another period of BTC accumulation by miners. Overall, less leverage in the crypto market could contribute to healthier price action.