Bitcoin recorded an intraday low below $ 30,000, the main level of support maintained during the two-month consolidation at the end of the week. Although BTC is struggling to recover, one trend remains clear, long-term holders (strong hands) and stronger BTC miners accumulate rather than sell them.
Small miners sell their BTC
BTC miners can be considered one of the most bull players on the market. They invest millions, if not tens of millions of dollars, in building energy infrastructure and aggregating the BTC hashrate. As with commodities, if an asset is desirable and is expected to increase in value, market participants will be motivated to “mine” or accumulate it.
Small miners who have less capital are likely to sell even at less ideal times like this. These miners probably do not have enough net cash to continue mining operations without selling their previously extracted BTC. Conversely, larger miners who are well-capitalized have the ability to hold their mined BTCs and wait to sell them at higher prices.
In the on-chain chart below, analyst Wu Blockchain found a short-term increase in the average number of BTCs traded by miners. During 2021, this metric recorded smaller peaks with an average of 60 BTC. However the average rose to 98.6171 BTC, signaling caution.
Although this activity of miners seems to be a signal of caution, it is important to look at what happened to BTC prices during similar events. For example, in the fourth quarter of 2020, this metric recorded several peaks, averaging over 120 BTC. BTC then rose to new highs and was at $ 40,000 by January 2021.
It is also important to look at the total amount of BTCs traded by miners. According to the chart below, the total amount of BTCs traded by miners decreased during consolidation.
This suggests that larger and well-capitalized miners refuse to sell at current prices and hold BTC in anticipation of higher prices in the future. This could explain the increase in the position of the miners of the Glassnode analytical platform.
Due to the financial stress on smaller miners, they are probably the ones who sell BTC during consolidation. At the moment, BTC is at an intraday low below $ 30,000 with a very low volume, indicating that long-term holders and larger miners are not selling.