Bitcoin has had a rough month, losing over 25% in recent weeks and falling to its lowest levels since February. While the testing of five-month lows on the BTC chart is mainly attributed to uncertainty around global monetary policy and the impending sale of assets belonging to the exchange that collapsed over 10 years ago, Bitcoin miners also play a significant role in this equation. They have been selling their reserves continuously for the past eight months.
In the first week of July, Bitcoin tested the $53,550 level, the lowest since mid-February. Analysts agree that the majority of this movement is due to concerns about the US Federal Reserve (Fed) retracting its plan to cut interest rates and the upcoming release of billions of dollars from the 140,000 BTC that belonged to the now-defunct Mt. Gox exchange, which ceased operations in 2014.
However, according to the latest July report from Binance Research, there may be more reasons for the selling pressure. One of these is the ongoing eight-month-long sell-off of cryptocurrencies by mining companies.
“Since November 2023, miners have consistently sold Bitcoin, marking the longest selling period since 2017. This has certainly been a source of price pressure and the decline in BTC prices,” wrote the Binance Research team in their July analysis.
As seen in the chart below, BTC miners last accumulated more cryptocurrencies than they sold in October 2023. Since then, they have been offloading their tokens: either to cover the costs of ongoing operations or to realize some profit.
Halving Has Also Left Its Mark
Binance Research also highlights the impact of the April “halving,” which cut the reward miners receive for each mined block of cryptocurrency by half. Previously, the reward was 6.25 BTC, but it was reduced to 3.125 BTC a few months ago.
Considering that block rewards, rather than transaction fees, constitute the majority of miners’ revenue, the halving has severely impacted their operations, making the sale of accumulated Bitcoins potentially the only way to stay afloat.
“It will be important to monitor how long this period of Bitcoin selling lasts, especially now that the cryptocurrency balance in miners’ wallets has reached its lowest level in 14 years,” stated Binance Research analysts in the report.
Although Bitcoin mining still seems to be a very profitable business, with miners earning an average daily revenue of over $26 million, this is four times less than the peak earnings earlier this year, which exceeded $107 million.
The cheaper Bitcoin becomes, the more cryptocurrencies miners have to sell to cover their monthly bills. The more Bitcoins they sell, the stronger the supply pressure on the market. The question remains, what event will be able to break this vicious cycle of sell-offs? Binance Research analysts ponder.
