Bitcoin (BTC) miners could potentially experience less selling pressure in the coming weeks due to a combination of factors. As reported by CryptoQuant, there has been a significant increase in the profitability of miners following the recent rally of Bitcoin to $69,000. Additionally, the hashrate of the Bitcoin network has also made a strong recovery, only experiencing a 3% drawdown from its all-time high compared to 8% in early July.
One of the key metrics to consider is the Miner Profit/Loss Sustainability, which has shown a substantial growth in miner revenues since the Bitcoin halving in April. This increased profitability suggests that miners may not feel as pressured to sell their Bitcoin holdings to cover operational costs. In fact, the daily miner revenues have surged by approximately 50% following the recent rally, reaching around $32 million from a year-to-date low of $22 million.
The rise in profitability and revenues has also had a positive effect on Bitcoin outflows from miners. Despite the increase in Bitcoin’s price, daily miner outflows have been lower compared to earlier in the year. For instance, when Bitcoin hit $70,000 in March, daily outflows ranged from 10,000 to 20,000 BTC. However, in July, these numbers have decreased to 5,000-10,000 BTC. This trend indicates that miners are potentially holding onto their Bitcoin rather than selling them.
Interestingly, there has been a noticeable shift in the balances of large and small Bitcoin mining entities. While larger miners have been increasing their holdings, smaller firms have been selling off their Bitcoin. Large miners now hold a total balance of 65,000 BTC, up from 61,000 at the beginning of the year, whereas small miners’ balance has decreased from 59,000 BTC to 51,000 BTC. This shift might be attributed to smaller miners needing to sell off more of their holdings post-halving event.
Despite the positive trends in profitability and hashrate recovery, CryptoQuant has warned that miners could still face the risk of operating at “depressed levels” in terms of fees. This caution is primarily due to the fact that miner profitability remains heavily dependent on Bitcoin’s price fluctuations. Therefore, it is crucial for miners to carefully monitor market conditions and adjust their operations accordingly to mitigate any potential risks.
The recent resurgence in miner profitability and hashrate recovery could have a significant impact on Bitcoin’s overall market dynamics. With less selling pressure from miners and a more stable mining ecosystem, Bitcoin may be able to sustain its positive momentum in the coming weeks.