Summary:
- Bitcoin miners sold an estimated 14,600 BTC in June.
- This amount was a 400% increment from May.
- Continuous selling of BTC by Bitcoin miners is hinting at capitulation.
- According to JP Morgan, Bitcoin production cost could have dropped to $13k, signaling possible more pain for BTC in the crypto markets.
Bitcoin miners sold almost 25% of their BTC holdings in June at fire-sale prices.
According to a report by the team at Arcane Research, Bitcoin miners sold roughly 14,600 BTC in June, which was ‘almost four times as much as in the previous month of May.’ The report explained that public miners had produced 3,900 Bitcoin this month, which means they have sold 400% of their production, draining their holdings by the earlier mentioned 25%.
Bitcoin Miners Have Been Selling to Free Up Liquidity to Pay for Infrastructure Upgrades and Machine Deliveries.
The Arcane Research team also pointed out that the Bitcoin miners were selling their BTC to ‘pay for upcoming infrastructure upgrades and machine deliveries.’
Bitcoin Selling by Miners Hints at Capitulation.
In a similar analysis, Will Clemente, a lead insights analyst at Blockware Solutions, had identified the selling of BTC by miners as possible capitulation. He explained that the ongoing market drawdown is compressing profit margins for Bitcoin miners. He said:
You can think of miners as being short hash, difficulty (a bi-product of hash), and energy costs; while being long Bitcoin’s price. As this ramp-up of new machines being plugged in takes place and Bitcoin’s price draws down, miners’ margins get compressed.
He also observed that hash-ribbons belonging to the 30-day moving average and the 60-day moving average were about to cross in a bearish manner providing further evidence of miner capitulation. He shared his analysis in the below two tweets.
(3/3) Currently, we have seen a bearish cross take place, indicating we are indeed in a period of miner capitulation. pic.twitter.com/YZrKrsp7Gz
— Will Clemente (@WClementeIII) July 15, 2022
Bitcoin Cost of Production Could Have Dropped to $13k.
Similarly, JP Morgan analysts earlier this week pointed out that the cost to produce one bitcoin might have dropped from $24k to $13k. The drop is attributed to more efficient mining rigs, which means that some Bitcoin miners are still selling their holdings at a profit.
However, the Bitcoin production cost has often been used by BTC traders as a possible floor price during a bear market. Consequently, the value dipping to $13k could result in more sell pressure. The JP Morgan analyst explained:
While clearly helping miners’ profitability and potentially reducing pressures on miners to sell Bitcoin holdings to raise liquidity or for deleveraging, the decline in the production cost might be perceived as negative for the Bitcoin price outlook going forward.
The production cost is perceived by some market participants as the lower bound of the Bitcoin’s price range in a bear market.
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