A selling trend began for Bitcoin miners in May as prices dropped sharply. The prices fell to an 18-month low point and got the marketing bleeding excessively. More Bitcoin miners have been forced to sell their assets as the price dropped further.
As the cost of electricity also increases, miners sell to keep up with production costs. Miners are finding it increasingly difficult to keep up with their HODL. This is mainly because of the continued price downward spiral and expensive electricity.
The current sell-off trend began in early 2022. As of then, analysts said miners sold out because they thought Bitcoin would keep falling.
The speculations turned out to be true. As Bitcoin struck an 18-month low this month, mining rigs produced before 2019 lost value.
At the time of this report, Bitcoin is selling at about $20,170. That price is almost the least profitable for an Antminer S19j Model of 2021.
Inability to HODL
Data from Arcane Research shows that certain Bitcoin miners get about 900 units of the asset daily. These are usually public Bitcoin miners. They normally hold as much BTC as possible to be part of the largest whales.
But now, the high cost of energy has put public miners in a precarious situation. The decreasing market value of the asset they mine makes it worse.
The figures have it that public mining firms disposed of 30% of their holdings. This was merely between January to April of 2022.
An analyst with GlobalBlock, Marcus Sotiriou, made a comment about the ongoing sell-offs. Sotiriou said the primary reason behind the sell-off was as a result of reduced profitability. He said the tariff on electricity too made it necessary for them to liquidate.
Liquidated assets from the miners have been to simply cover operation costs. GlobalBlock is a digital asset brokerage firm.
Another analyst from Glassnode stated that some other miners have been selling all along. The analyst said miners’ balance sheets have been stagnant from 2019-2021. They got into the situation while there was an uptrend in prices at the time.
He said miners have disposed of 9,000 BTC from their holdings in the past week. Coming down from about 60,000 BTC.
The Current Sell-off Was Foreseen
There are a lot of reports pointing to the present sell-off situation. Market experts have, however, said that is the usual behavior of miners in a bearish market.
They said miners accumulate when the market is bullish and sell in bearish times. The sales at that period will help them tidy interest payments or expensive costs.
An instance happened in the November 2018 bearish market trend. Then, miners sold a huge amount of their assets while the price of Bitcoin was yet falling.
The effect of the macroeconomy is still biting hard on the crypto market. There is currently no telling when the circle will break.