Early this month, the price of Bitcoin (BTC) surged past $70,000 during a 19-day run of inflows for exchange-traded funds (ETFs).
But now that this rally has reached a standstill, the price is declining. This can result in the second negative monthly close of the year.
Miners Sell $2 Billion Worth of Bitcoin
Market watchers blame recent withdrawals from spot ETFs and large sales by Bitcoin for the poor performance.
Since almost all Bitcoin are selling their coins, Matthew Sigel, head of digital research at Bitcoin ETF issuer VanEck, has observed. This observation was corroborated by blockchain analytics company IntoTheBlock, which revealed a significant reduction in the Bitcoin holdings of leading miners.
The Bitcoin reserve statistic evaluates financial health. A decline usually means miners sell their holdings rather than build them up. The reserve has already fallen to an annual low of over 1.9 million BTC this month alone, as miners have sold about 30,000 BTC worth of revenue.
“Bitcoin miners have sold over 30,000 BTC (~$2 billion) since June, the fastest pace in over a year. The recent halving has tightened margins, prompting this sell-off,” IntoTheBlock stated.
The increased sales result from their ongoing low revenue after the recent halving event. The April halving reduced block rewards to 3.125 BTC, a 50% decrease. Consequently, daily miner earnings have fallen to roughly $35 million, a 55% decrease from their peak of $78 million in March.
These patterns have increased the downward pressure on the price of Bitcoin, indicating that if the current performance continues, it might have a negative month. With a 4.56% decline in June, Coinglass data suggests that Bitcoin is headed for its second negative monthly closing of 2024. In April, the asset had already experienced a 14% decrease.
However, according to Bitcoin analyst Willy Woo, this downward trend could be stopped if BTC recovers its hash rate and eliminates weak players.
“When Bitcoin sheds weakness what it looks like are inefficient miners running old hardware and high costs go into bankruptcy. While others are forced to upgrade hardware that’s more efficient. Why? Because their income got halved carrying the same costs. Both cases force miners to sell their BTC to pay for losses or hardware upgrades. After that’s done, the selling has ended and only the strong remain and they hodl waiting for higher prices,” Woo explained.
