Calculated Unload: Bitcoin Miners’ Strategic Selloff Before Halving

In Brief
Bitcoin miners are strategically selling off reserves ahead of the halving event to cover costs, causing increased market pressure.
The flow of Bitcoin from miners to exchanges is now three times higher than the movement in the opposite direction, signaling strong selling pressure.
The Grayscale Bitcoin Trust has sold around 106,575 BTC since spot ETFs were approved in the US, exacerbating the selling pressure.
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Bitcoin market selling pressure is increasing, and miners are adding to it in what has been described as a ‘strategic move.’ According to analysts, savvy Bitcoin miners will likely continue to increase the sale of assets to cover costs as the next halving approaches.

On January 26, on-chain analytics provider CryptoQuant reported that miners selling Bitcoin reserves ahead of the halving was a strategic move likely to result in more selling pressure.

Bitcoin Miners Add to Selling Pressure

A “significant shift” is occurring in the Bitcoin mining sector as the halving nears, according to analysts.

On-chain data shows that there has been a notable reduction in the Bitcoin reserves held by miners. Moreover, there has also been an increase in BTC transfers to centralized exchanges. It asserted:

“In fact, the flow of Bitcoin from miners to exchanges is now three times higher than the movement from exchanges to miners. This trend signals strong selling pressure from the mining community.”
Miners typically take profits ahead of a halving event to cover operational costs and prepare for future investments. The halving has been estimated to occur in 87 days, around April 22, according to CoinGecko.

Moreover, with the reward for mining a block getting slashed to 3.125 coins, this effectively reduces the miners’ income unless the price of Bitcoin increases proportionally.

Read more: Who Owns the Most Bitcoin in 2024?

To keep up with the ever-increasing competition, Bitcoin miners need to constantly invest in more efficient equipment. Therefore, selling some of their BTC reserves provides the capital for these overheads and investments. CryptoQaunt noted:
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“The increased selling pressure from miners could impact Bitcoin’s price in the short term.”

Bitcoin miner reserves are currently 1.83 million BTC, which is worth around $73.4 billion. They have been dwindling since the selling phase began at the end of October.

BTC Reclaims $40,000

Selling pressure has also been exacerbated by outflows from the industry’s largest crypto asset manager, Grayscale.
The Grayscale Bitcoin Trust has sold around 106,575 BTC since spot ETFs were approved in the US on January 11.

Moreover, the US government also has plans to auction off over 2,930 BTC, worth about $130 million, seized in the Silk Road case.

Nevertheless, Bitcoin prices reclaimed the psychological $40,000 level during the Friday morning trading session in Asia.

The asset was changing hands for $40,120 at the time of writing following a minor daily gain. However, it has dropped 13% over the past fortnight, and the short-term outlook is bearish.

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Martin Young

Martin Young is a seasoned cryptocurrency journalist and editor with over 7 years of experience covering the latest news and trends in the digital asset space. He is passionate about making complex blockchain, fintech, and macroeconomics concepts understandable for mainstream audiences. Martin has been featured in top finance, technology, and crypto publications including BeInCrypto, CoinTelegraph, NewsBTC, FX Empire, and Asia Times. His articles provide an in-depth analysis of cryptocurrency markets, decentralized finance, emerging projects, regulatory developments, and real-world adoption of digital assets. In addition to crypto, Martin has more than two decades of experience in web development and cyber security. He applies that extensive knowledge to his articles regarding the latest threats and exploits in the crypto industry. Outside of writing, Martin spends a lot of time traveling in remote parts of Southeast Asia where he is based and is an avid photographer having also published photos for CNN.

Grayscale Selling Scooped Up By Other BTC Funds: Why Is Bitcoin Still Falling?

In Brief
Grayscale, the largest digital asset manager, has seen over $3.3 billion in outflows since converting its GBTC fund into a Bitcoin ETF.
BlackRock and Fidelity are the biggest buyers of Bitcoin, holding 39,925 and 34,127 BTC, respectively, while Grayscale offloaded 82,525 BTC.
ETF Store president Nate Geraci suggests a strategic acquisition of Grayscale could make sense for the right traditional ETF issuer.
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Crypto markets have been rattled by days of Bitcoin offloading by the industry’s largest digital asset manager, Grayscale. Bitcoin continues to fall below $40,000, but much of the Grayscale outflow has been scooped up by other fund managers, so why are traders selling their coins?

Grayscale has been selling Bitcoin since US regulators approved spot BTC exchange-traded funds on January 11.

Grayscale Bitcoin ETF Share Selling Continues

Since it was permitted to convert its GBTC fund into a spot Bitcoin ETF on January 11, the firm has seen more than $3.3 billion in outflows. Additionally, it has been depositing large amounts of Bitcoin into Coinbase in preparation for further sales.

The reason for the Grayscale exodus is largely due to investors rebalancing their portfolios and entering funds with lower fees for better returns.

On January 24, CC15Capital, which has been posting updates on Bitcoin ETF holdings, said:

“Stop panic-selling your Bitcoin just because you see panic-inducing tweets about GBTC coins being sent to Coinbase every morning.”
BlackRock and Fidelity have been the biggest buyers of Bitcoin, with 39,925 and 34,127 BTC held, respectively, as of January 22. However, Grayscale has offloaded 82,525 BTC in the same period.

Read more: What Is a Bitcoin ETF?

Nevertheless, the total aggregate amount of BTC bought by the newly launched spot ETFs, not including Grayscale, remains a positive figure at 25,938 coins, according to CC15Capital.
He added that both himself and fellow analyst James Seyffart think it will be around 25%,

“But this is not something I’d be[t] a sushi lunch over, too many unknowns.”

According to its website, the Grayscale Bitcoin Trust holds 536,694 BTC worth an estimated $21.3 billion. So, it is unlikely that the selling is over yet.

Nevertheless, a lower BTC price will be good news for the other ETF issuers and investors waiting to buy the dip.

Acquisition Potential
ETF Store president Nate Geraci commented:

“A strategic acquisition of a firm such as Grayscale makes a ton of sense for the right traditional ETF issuer assuming the price is palatable.”

Seyffart backed the notion that a larger player could acquire the crypto asset manager:

“Someone acquiring Grayscale is theoretically possible, possibly even likely over a long enough time frame, particularly with the current issues surrounding their parent company.”

Meanwhile, Bitcoin prices had lost $40,000 again. They were down 0.8% on the day at $39,710 at the time of writing.