Bitcoin is an asset unlike any other. Not only are prices impacted by normal market participants buying and selling, but miners powering the underlining network with massive BTC reserves can also have an even greater effect.
Several large miners were seen moving “unusually large” sums of BTC overnight, just ahead of the massive market collapse. Could they be responsible for the most recent plummet in Bitcoin price below $11,000? And why are these miners suddenly selling their cryptocurrency when the asset is supposed to be in a new bull market?Blockchain Data Shows Massive BTC Mining Pool Outflows Ahead of Crypto Market Collapse
When Bitcoin was created, it gave birth to new financial technology. There’s the cryptocurrency itself, and then there is the blockchain network these tokens underpin.Related Reading | Bitcoin Breaks Below $11,000, How Deep Will The Selloff Go?
The miners that help secure and operate the Bitcoin network, often need to sell the cryptocurrency in order to fund operations. Miners may wait until prices are higher to do so. With Bitcoin trading over $10,000 over the last couple of months, miners may have decided it was the right time to offload some supply.
, miners began moving an “unusually large” sum of BTC to exchanges. Bitcoin had already fallen below $12,000 at that point.Miners are moving unusually large amounts of since yesterday. , , have taken the bitcoins out of the mining wallets and sent some to the exchange. — CryptoQuant.com (@cryptoquant_com)
Is The Feared Post Halving Death Spiral About To Hit Bitcoin?
After the asset failed to set a higher high, miners may have taken that as a sign the uptrend was over, and decided to de-risk. Whatever the reason, the extra supply of BTC dumping into the market may have caused an even sharper drop.Related Reading | How Rising Bitcoin Fees May Have Prevented Post-Halving Death Spiral
Although after Bitcoin’s halving, the asset is expected to begin its next bull run, a post-halving miner death spiral has been expected. This only happens when Bitcoin price falls below the cost of production. Because the cryptocurrency’s cost to produce each BTC doubles with each halving, the sudden change in miner revenue was expected to prompt a selloff.
BTCUSD Daily Bitcoin Cost of Production | Source:
Rising Bitcoin fees were said to prevent such a death spiral from happening, but what will take place if the current selling pushes Bitcoin far below the cost of production?
In fact, Bitcoin is now trading slightly below the cost of production, and any fall lower could lead to past examples such as the November 2018 drop and the recent Black Thursday collapse. Is that’s what is next for the crypto market?
