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Bitcoin (BTC) Miners Sell Most in 5 Years

Bitcoin (BTC) Miners Sell Most in 5 Years
Rising global electricity prices and the falling price of BTC have made cryptocurrency mining increasingly unprofitable. Retail Bitcoin miners, who were hit earliest by mining costs, had to shut down their rigs some time ago. Meanwhile, the current declines in the price of BTC have meant that even large mining pools today have to sell more coins to maintain their business.

Why do Bitcoin miners sell?

There are two main reasons why Bitcoin miners are willing to sell their coins. On the one hand, there are huge profits when BTC prices are high. Then, increased sales by miners signal a major overvaluation of the cryptocurrency market and usually occur during and at the end of a long-term bull market.

On the other hand, the reason for selling can be extremely low BTC prices. These make maintaining the Bitcoin mining business on the brink of profitability. Bitcoin miners then sell more than usual in order to cover current business costs and stay afloat in the bleeding market.

The latter situation is currently being observed. On November 9, BTC fell to a low of $15,588. This has caused even the largest Bitcoin miners, who have relatively cheap energy and the best equipment, to find themselves at a loss.

Selling pressure highest in almost 5 years

The indicator correlated with production costs is Bitcoin Miner Sell Pressure. The author of this metric @caprioleio explains that higher values mean higher than usual selling pressure. Conversely, entering the red area signals extraordinarily high selling pressure.

The analyst adds that the sales pressure indicator “identifies industry stress, excess, and miner capitulation.” He further adds that “in some instances, BMSP spots capitulation before Hash Ribbons.” It is worth mentioning that the latter gave a buying signal at the end of August 2022, after the previous capitulation of Bitcoin miners.

Bitcoin miners shed reserves

Bitcoin miners today are experiencing increased production costs and high selling pressure. This leads to the need to divest some of their reserves, increased sales, and further declines in the price of BTC.

In recent days, we have seen a sharp decline in Bitcoin miners’ reserves. Thus, it seems that the declines as a result of the FUD associated with the FTX bankruptcy were mainly driven by the miners’ capitulation.

The good news, on the other hand, is that despite the difficulties of Bitcoin miners, the hashrate of the Bitcoin network remains at record-high levels. This means that despite the ongoing capitulation of miners and low BTC prices, the largest mining pools are still able to maintain their rigs operational.

With the deluge of bad news, hacks and bankruptcies of many cryptocurrency companies, it’s important to remember that the Bitcoin network has never been as secure and resistant to hacking as it is today.
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