Bitcoin miner reserves are shrinking as miners sell more of the asset to cover their expenses, according to on-chain analysis.
The amount of Bitcoin held by miners has been in decline this year, with a sharper drop-off observed in March. The data was revealed by on-chain analytics firm CryptoQuant on March 9.
According to the chart, Bitcoin miner reserves are now at their lowest levels since October 2021. They have fallen to 1.83 million BTC.
Miner selling patterns have deep impacts on the rest of the market due to the number of assets they hold.
“Despite many on-chain metrics indicating bullish signs during the recent bullish stage of the market, the miner reserve metric has entered a bearish trend and reached new yearly lows.”
Bitcoin Miner Profit Taking
Miners have used the recent bullish momentum and the 45% gain in BTC prices this year to take profits. This would also be used to balance expenses which have been high recently due to a spike in global energy prices.
Furthermore, CryptoQuant advised caution for the coming weeks.
“This selling behavior might end up in a mid-term bearish sentiment in the market. As a result, it is better to manage risks in the upcoming weeks.”
The firm’s miner position index (MPI) shows withdrawal spikes in January and again in early March. MPI is a measure of BTC outflows to exchanges from miner wallets relative to their one-year moving average. Additionally, the latter two have coincided with price drops.
Bitcoin miners are currently facing tough network conditions as the hash rate and difficulty are close to peak levels. The average hash rate is currently around 10% off its March 2 all-time high at 314 EH/s (exahashes per second). Meanwhile, mining difficulty is at a peak level of 43T.
As a result, Bitcoin miners are facing a lot of competition in addition to costly energy bills and high semiconductor prices.
Bearish Pressure Mounting
Bitcoin prices have dropped to their lowest levels since mid-February today. The asset dropped 2% over the past 12 hours and has now settled at around $21,723 at the time of press.
Furthermore, BTC has lost 13% since its 2023 high of $25,000 on Feb. 21.
In addition to selling pressure from the Bitcoin miner cohort, Silvergate’s voluntary liquidation, further Fed rate hikes, and the ongoing U.S. war on crypto all paint a bearish picture for BTC and its brethren in the short term.
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