Ahead of the fourth halving, on-chain analysis highlights strong selling pressure from miners: bitcoin reserves returned to June 2021 levels.
According to a recent report from the on-chain analysis provider CryptoQuant, since the beginning of 2024, Bitcoin miner reserves have decreased by 14,000 bitcoin, reaching the lowest levels since June 2021. Considering an average price of $43,000 per bitcoin, miners would have sold the equivalent of over $600 million. Now, reserves would amount to approximately 1.8 million bitcoin.
The reasons for the sale
The sale is certainly not a novelty. Mining companies must cover the operating costs of their facilities, including electricity and ASICs, the hardware required for mining. According to some analysts, including Matthew Sigel, head of digital asset research at VanEck, this time miners are also selling to strengthen their balance sheets ahead of the upcoming halving. The analyst emphasized that the selling pressure from each individual miner depends on their operating costs: miners with lower expenses are selling fewer bitcoin, while companies with high costs need to sell almost 100% of their earnings.
The analysis is also supported by a recent report from Bitfinex, which suggests that since the approval of ETFs, miners have increased their sales of bitcoin to raise capital to purchase new machines and prepare for the halving. The report highlights how this selling pressure limits the rise in Bitcoin’s price. The research also analyzes Glassnode data, which shows that on January 12 (the day after the ETF launch), miners transferred the bitcoin equivalent of approximately $1 billion to exchanges.
Leading up to the halving
The next halving is expected to occur in the second half of April 2024, with the block rewards decreasing to 3.125 BTC. It’s natural for miners to prepare for the supply shock. Having sold a large portion of their bitcoin reserves prior to the halving, it’s plausible that the selling pressure from miners will ease and may stabilize in the months following the reward reduction.
