- Bitcoin’s lackluster performance in recent months has prompted miners to choose HODL
- Miner liquidations occur regularly and should not be seen as an anomaly
After a prolonged HODLing period, Bitcoin [BTC] miners eventually decided to liquidate a significant portion of their holdings.
In fact, according to data from CryptoQuant, miners have extracted more than 900 million Bitcoins from their purses in the past two days, worth $26 million at the time of writing.
Source: CryptoQuant
Major sell-offs are typically viewed as a bearish event for the crypto asset, as they flood the market with more supply. However, miner liquidations occur regularly and should not be seen as an anomaly.
Read Bitcoin [BTC] Price Forecast 2023-24
Miners are running out of patience
Miners are responsible for creating new BTC tokens and putting them into circulation. While they are rewarded in BTC for their efforts, they need cash to cover mining expenses such as machinery, power, and rent.
A previous article from AMBCrypto highlighted how this frequent process was disrupted by Bitcoin’s lackluster performance over the past month and a half.
The king coin has failed to break out of a tight trading range since mid-June, according to CoinMarketCap. The problem was exacerbated in August, when the leading cryptocurrency struggled to break even above the $30,000 level.
Source: CoinMarkerCap
In the absence of a meaningful price increase, miners for a change switched to a hoarding mentality and decided to wait for the next step up. But as seen before, their patience eventually ran out and they decided to settle for the reduced yields.
Sales on a sharp decline
Miners’ nervousness could be measured by their rapidly declining earnings. Miner incentives consist of two components: block rewards and transaction fees. Block rewards are fixed and miners factor them into their budgeting.
However, transaction costs are variable, which ultimately affects their revenue. Since reaching an all-time high in early May, fee income has been steadily declining. Again, blame Bitcoin’s prolonged lull on volatility here.
Source: Glassnode
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Market is waiting for the next big step
Market participants eagerly await a bullish or bearish breakout for BTC. Interest shown by TradFi giants was responsible for the last major rally in June. However, the next step will likely depend on the SEC’s response to a wave of mocking Bitcoin Exchange Traded Funds (ETFs).
Sentiment turned in favor of bulls in the derivatives market. According to Coinglass, the Longs/Shorts ratio was even greater than one on August 12, indicating the dominance of traders chasing price gains.
Source: Coinglass
