Over the last few days, Bitcoin [BTC] holders have been worried about the coin’s price declining further due to miners selling their holdings. How much of the BTC supply do miners own, and is it enough to impact the market in the event of a sell-off?
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Bitcoin declines
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Bitcoin rose to around $18,000 on 13 December, raising hopes for where the price may go by the end of 2022. However, following the release of the FOMC report, the price fell, and at the time of writing, BTC was trading at about $16,000.
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According to the location of the Relative Strength Index (RSI) metric on the TradingView daily timeframe chart, BTC was in a negative trend. As of the time of this writing, the RSI was below the 50 line. What does this signify in terms of mining profits?
Source: TradingView
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Network difficulty and hashrate up, revenue down
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The Network Difficulty indicator revealed a sharp rise in the amount of network difficulty required to process blocks and mine BTC. The network difficulty reached an all-time high of over 36 Terahash from late November to early December, setting a record for the year.
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The indicator was high even though it decreased at the time of writing, sitting around 34k. Additionally, an analysis of the total hashrate statistic revealed that it had experienced an upward trend.
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The profitability of mining had been trending in the other direction over the months, despite increases in hashrate and network difficulties. The statistic revealed that miners’ revenue has been dropping in recent months. The income was about $44,000 as of January.
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However, as of the most recent data, the revenue had dropped to about $16, making it less viable to resolve blocks and generate BTCs. The revenue decreased further due to Bitcoin’s ongoing decline, which has led to miners’ fears of a sell-off. But what impact could their sell-off have on the market?
Source: Blockchain.com
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Miners reserve vs circulating supply
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Looking at the volume may help determine the effect that a selloff may have on BTC. At the time of writing, miners held over 16,000 BTC, worth about $1.8 million, according to data from CryptoQuant.
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A chart observation also revealed that the reserve had decreased over time, which is understandable considering the reduction in the price of BTC.
Source: CryptoQuant
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Data from CoinMarketcap also indicated that there were currently approximately 19.2 million Bitcoins in circulation, which, at the current price, would be worth almost $300 billion. Therefore, if there is a sell-off of miners, the impact will be negligible, if any.
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A further reduction in the price of BTC could be a possibility because, historically, equities and cryptocurrencies usually decline during this market period. This fall won’t be caused by a sell-off among miners, though.
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365-days investors at a loss
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An analysis of BTC’s profitability for investors who held it over the previous 365 days revealed that they were holding at a loss. The Market Value to Realized Value Ratio (MVRV) revealed that holders have been holding at a loss of over 32% over the previous 365 days.
Source: Santiment
