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Bitcoin Miners Always Sell Into Halvings, Is This Time Any Different?

On-chain data shows Bitcoin miners have always sold as Halvings have occurred. With the next one just around the corner, how are miners behaving this time?

Next Bitcoin Halving Is Less Than Two Days Away Now

In a CryptoQuant Quicktake post, an analyst discussed Bitcoin miners’ behavior in the build-up to the next Halving.

The “Halving” is a periodic event on the Bitcoin network where the cryptocurrency’s block rewards (the compensation miners receive for solving blocks) are permanently slashed in half.

This event occurs approximately every four years, and according to NiceHash’s countdown, the next one will occur in just over 32 hours.

Bitcoin Halving

Bitcoin miners earn revenue from two sources: transaction fees and block rewards. Historically, the former has been quite low on the BTC network, so the miners primarily depend on the latter to pay off their running costs.

Since the block rewards are cut in half during Halvings, these events naturally deal a significant blow to the miner’s revenues. As such, it’s not surprising that the miners have generally shown a reaction to the event in the past cycles.

“One of the common dynamics that occur in every cycle of cutting the issuance of new BTC is the significant selling pressure exerted by miners,” says the quant. One way to gauge the degree of selling pressure coming from these chain validators is via the Miner to Exchange Flow metric.

This indicator tracks the total amount of Bitcoin moving from miner-associated addresses to wallets connected to centralized exchanges. As miners usually deposit Bitcoin to these platforms for selling, this flow can provide hints about their selling behavior.

Now, here is a chart that shows the trend in the 30-day moving average (MA) BTC Miner to Exchange Flow over the last few years:

Bitcoin Miner to Exchange Flow

As displayed in the above graph, the 30-day MA Bitcoin Miner to Exchange Flow had surged to high levels in the 2020 Halving event, implying that this group had potentially been participating in a selloff.

This selling push may have come from the miners planning to exit, given the sharp revenue reduction that was set to occur. The graph, though, clearly shows that no such selling pressure has emerged this time around despite the event being just around the corner.

So, what’s going on here? The analyst suggests that the Bitcoin miners may have already completed the latest round of selling in advance (as the exchange inflows from the cohort did spike in February). If this is true, the quant thinks this could benefit the market in the short term.

BTC Price

Bitcoin has continued to move sideways inside a range recently, as its price is still trading around $63,500.

Bitcoin Price Chart

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Bitcoin Miner Selloff Poses “Negligible Impact”, Quant Argues

On-chain data shows the Bitcoin miners have been selling recently, but this quant has argued that this selloff shouldn’t have much impact on the market.

Bitcoin Miner Reserve Has Registered A Decline Recently

In a CryptoQuant Quicktake post, an analyst discussed the latest selling pressure that the miners have been putting on the market. The indicator of interest here is the “miner reserve,” which keeps track of the total amount of Bitcoin that the miners combined hold in their wallets right now.

This metric can naturally provide information about the collective behavior of these chain validators. Generally, the miners withdraw their coins from their reserve when they want to sell, so a decline in the indicator can potentially have bearish consequences for the asset.

A rise in the metric, on the other hand, may be bullish for the cryptocurrency’s price as it suggests the miners as a whole are in accumulation mode at the moment.

Now, here is a chart that shows the trend in the Bitcoin miner reserve over the past year:

Bitcoin Miner Reserve

As displayed in the above graph, the Bitcoin miner reserve has been on its way down since October, implying that this cohort has withdrawn a net amount of BTC from their wallets during this period.

This latest selloff from the miners has recently been a topic in the community, with many speculating about the possible bearish impact arising from it. The quant has a different opinion on the matter, however.

“The sell-off of Bitcoin reserves by miners, as discussed on X and various portals, is unfounded,” explains the analyst. To back this claim, the quant has pointed out the exact numbers involved here.

Before this selling started, the miner reserve had a value of around 1,84,997 BTC. Following the decline that the indicator has witnessed since then, the miners now hold about 1,833,222 BTC.

This represents a decrease of 12,755 BTC, which, although substantial on its own, doesn’t seem too large in the grand scheme of things, especially considering the size of the miner reserve itself. “The minimal amount of bitcoin sold has negligible impact on the market,” notes the analyst.

Bitcoin Miner Inflows & Outflows

The above chart shows the data for the Bitcoin inflows and outflows being made by the miners. There have indeed been outflows taking place recently, which is why there has been talk of a selloff.

At the same time, the inflow transaction volume has also been at significant levels, making up for these outflows. This is the reason for the relatively small net decrease in the total miner reserve.

BTC Price

Bitcoin had recovered beyond the $43,000 mark earlier, but the asset has seen a setback during the past day as it has slipped back towards $42,500.

Bitcoin Price Chart

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Bitcoin Erases Recovery As Miners Cash Out 3,000 BTC

On-chain data shows the Bitcoin miners have participated in a 3,000 BTC selloff recently, something that may explain the asset’s latest pullback.

Bitcoin Miner Reserve Has Taken A Plunge Recently

As pointed out by analyst Ali in a new post on X, the BTC miners have participated in some selling recently. The indicator of interest here is the “miner reserve,” which keeps track of the total amount of Bitcoin sitting in the wallets of all miners.

When the value of this metric goes up, it means that the miners are receiving a net number of coins in their addresses right now. Such a trend suggests that these chain validators are choosing to accumulate the asset currently, which can naturally have bullish effects on the price.

On the other hand, a decline implies that this cohort is transferring coins out of their wallets at the moment. Generally, the miners make such outflows when they are looking to sell their BTC, so this kind of trend can have bearish implications for the cryptocurrency.

Now, here is a chart that shows the trend in the Bitcoin miner reserve over the past month:

Bitcoin Miner Reserve

As displayed in the above graph, the Bitcoin miner reserve has registered a sharp drop during the past couple of days. During this withdrawal spree, these chain validators transferred out more than 3,000 BTC from their wallets, worth around $128 million at the current exchange rate.

Bitcoin had recovered to the $43,800 level earlier after news had come out about Microstrategy completing another substantial purchase. As the miners made these outflows, though, the cryptocurrency witnessed a drawdown towards the $42,000 mark.

Given the timing, it would appear possible that the miners had made these transfers to cash in on the recovery and this extra selling pressure may have contributed to the decline that the asset ended up seeing.

Miners are a group that has to pay constant operating costs in the form of electricity bills, so they regularly sell some of the BTC they mine and earn from transaction fees in order to cover these expenses.

More often not, though, the miners only participate in relatively low levels of selling, which is readily absorbed by the market and the cryptocurrency doesn’t feel too much impact

This time around, though, these chain validators have sold a sizeable amount inside a narrow window, which is potentially why Bitcoin has appeared to have been affected.

In some other news, the market intelligence platform IntoTheBlock has revealed the average holding time on the Bitcoin blockchain and how it compares against other networks.

Bitcoin Holding Time

As is visible above, Bitcoin holders carry their coins for 4.3 years on average, which is far greater than what Cardano (ADA) and Avalanche (AVAX) blockchains observe.

While miners don’t tend to HODL because of their running costs, it would appear that the normal investors on the BTC network are more than making up for it by holding for very extended periods.

BTC Price

The market doesn’t seem to be too discouraged after the drop due to the selling pressure from the miners, as Bitcoin is now once again making a recovery push. So far, BTC has climbed back to the $42,900 level.

Bitcoin Price Chart