On January 17, Bitcoin miners experienced a substantial sell-off, parting with over 10,000 BTC, marking the most significant daily decline in their reserves in more than a year. Data from on-chain analytics firm CryptoQuant reveals that miner reserves dropped by 10,233 BTC, approximately valued at $450 million.
Bitcoin miners typically alternate between accumulation and selling phases. A previous report from Bitfinex in 2023 indicated that miners were accumulating Bitcoin during a period of less favorable prices and profitability. However, with recent market rallies and increased profitability, miners have shifted to a selling phase, taking advantage of higher prices or bolstering cash flow.
As of now, Bitcoin’s price hovers between $42,000 and $43,000. Despite the recent sell-off, Bitcoin miner reserves have reached their lowest point since July 2021, standing at 1.83 million coins, with an estimated value of approximately $78 billion.
Alongside the decline in miner reserves, Bitcoin’s hashrate has witnessed a 34% drop, reaching its lowest point in several months. This reduction is partly attributed to miners redirecting power to the grid during extreme winter storms in the USA, supporting critical services and household heating needs.
Despite the significant miner sell-off and hashrate decline, Bitcoin’s price has remained relatively stable. This resilience may be attributed to substantial inflows into Bitcoin ETFs, with nearly $900 million invested in the first four days since their launch. These inflows could be driving strong Bitcoin purchases in the open market.
In contrast, stocks of Bitcoin mining companies have not performed well, underperforming after a strong rally in 2023. A recent research report from Bernstein suggests that current weaknesses in mining stocks may present an investment opportunity, identifying challenges following the approval of spot Bitcoin ETFs, such as reduced investor interest and the potential impact of lower Bitcoin prices on further underperformance.
This information is not legal advice. Do your own research before making any decisions. Only invest what you can afford to lose and seek independent financial advice if needed. Understand the risks involved before purchasing any cryptoassets.