What Happened: The latest Bitfinex Alpha report attributes the recent price pullback to Bitcoin miners’ selling ahead of the upcoming halving event in April 2024. This indicates the significant impact of miners on market liquidity and price discovery.
Following the ETF approval, Bitcoin miner reserves dropped significantly, with the second day of ETF approval (Jan.12) witnessing a $1 billion increase in Bitcoin miners’ outflow to exchanges. This marked a six-year-high in miner outflow.
The last week of January saw a net outflow of 3,500 bitcoin in a single day, recorded from miner wallets. This marks the highest level observed since May 2023. The BTC Miner reserve has decreased to 1.83 million Bitcoin, the lowest point since June 2021.
The halving will reduce Bitcoin rewards for miners and decrease miner profitability. Thus, this selling activity aims to create a capital base for the required upgrades in infrastructure such as machinery and mining facilities.
Why It Matters: According to a Charles Schwab report, central banks around the world are poised to cut interest rates in 2024. The Fed Reserve is expected to lead the trend, thereby causing the dollar to continue falling moderately as the yield differences between the U.S. and other countries shrink.
Analysts in the Bitfinex report note a weaker dollar leads to a rise in miner profits and vice versa.
These developments make social media observers bullish. One observer sees the next “bull leg” begin “once the dollar rolls over again.”
James Van Straten, lead analyst from CryptoSlate, a cryptocurrency news site, notes that the past 30 days of all cohorts, miners, and exchanges have overall included 61,000 Bitcoin:
Past 30 days of all cohorts, miners and exchanges included have accumulated 61,000 #Bitcoin.
When monthly issuance gets cut in half in April to 13,500 #Bitcoin.
If demand stays the same, it outpaces issuance by a factor of 4.
— James Van Straten (@jvs_btc) February 6, 2024
After the Spot ETF approvals,…