Bitcoin recovered slightly over the weekend, but still remains suppressed at a relative seasonal low of $27,360. What’s behind the latest slump?
According to crypto market analysis firm CryptoQuant, the downward price pressure may be coming from miners.
In a post from BaroVirtual on Saturday, the analyst noted that miners have been drastically reducing their holdings since May 5, with miner net position change turning negative on May 9. The metric gauges how much miner reserves are growing – or shrinking – each day, helping measure whether miners are HODLing or selling their newly mined coins.
The chart shows that miners were heavily accumulating Bitcoin from mid-March until mid-April, after which a wave of sell pressure helped push the asset down from over $30,000 to below $27,300 within three days.
That selling pressure has remained roughly consistent until today, culminating in Bitcoin tumbling to a multi-month low of $26,260 on Friday.
Before Bitcoin’s dip last week, miners were having a field day in new revenue netted from new hype surrounding Ordinals and BRC-20 tokens, which are bringing Ethereum-like utility (NFTs and tokenization) to Bitcoin.
The phenomenon also drove up Bitcoin’s fees much like Ethereum’s, reaching an average of $30 per transaction on May 8. These fees went straight into miners’ pockets, providing a massive bonus atop the 6.25 BTC they typically earn per block.
Miners’ net position briefly went positive during the days of the BRC-20 hype but has quickly returned to negative since fees went back down to normal. Thankfully for bulls, CryptoQuant has reason to believe the selloff will end soon.
“Currently, the miner net position values are in the zone where Bitcoin bounced off in previous times, and the local uptrend continued,” explained BaroVirtual. “In this regard, it can be assumed that miners can significantly reduce their pressure, i.e., slow down sales or cancel sales when Bitcoin hits the $24,000 target.”
In an interview last month, CryptoQuant analysts told CryptoPotato that Bitcoin’s value could return to its previous all-time high of $69,000 by early next year, as institutions buy-in during late 2023.