Earlier this week, the price of Bitcoin plummeted, leading to over $300 million in liquidations in the cryptocurrency market in a single day. What caused this sudden fluctuation?
Bitwise quantitative research analyst Gayatri Choudhury stated that there are two key driving factors behind the sell-off, both of which are unrelated to the Bitcoin ETF.
Miners are Dumping
The analyst pointed out for the first time on Tuesday that the activities of Bitcoin miners— a group that “is often overlooked” by market observers— are a significant factor. Since Bitcoin’s fourth halving in April, miners on the network have been selling their Bitcoin as their income has drastically decreased, and competition from global rivals has reached historic highs.
Choudhury said, “On June 9, over 3,000 BTC moved from mining pools to Binance, marking a two-month high.” The analyst cited CryptoQuant’s dashboard, which indicates that such large-scale sell-offs are often associated with price declines, such as in mid-April after the halving, or late May.
CryptoQuant released a report earlier this month attributing the sell-off activity of miners to the largest publicly traded mining company, Marathon Digital Holdings, in June. The company sold 1,400 BTC, accounting for 8% of its total BTC holdings.
Bitwise and CryptoQuant also pointed out that on June 10, miners sold 1,200 BTC through over-the-counter trading, marking the highest daily volume since March. As for regular exchanges, Choudhury stated that in June, over $4.5 billion in assets moved from miners’ balances to exchanges.
Regarding the motivation for the sales, Choudhury emphasized that miners’ profit margins have been very low since the halving. She said, “Since the halving, the average miner revenue per terahash of energy used to secure the network has fallen by 56%.”
Mt.Gox Fear
On Monday, Mt.Gox announced that after a decade of dormancy, the company will finally repay its long-standing Bitcoin losses to customers in July, further exacerbating market concerns. The exchange holds over 141,000 bitcoins, valued at over $8.5 billion, leading to fears of sudden selling pressure on Bitcoin.
“The current situation may look difficult, but remember, just a year ago, Bitcoin was trading at $30,000. A year ago $10,000,” Choudhury concluded.
Although the bearish impact of Mt.Gox’s selling pressure has not yet materialized, cryptocurrency investors are currently looking forward to the launch of Ethereum ETF in the US in the same month. Analysts at K33 Research believe that these ETFs will generate $4 billion in revenue in the first five months after listing.