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Bitcoin Miners Are Dumping BTC At a Faster Rate Post Halving, But Why?

Tony Spilotro by Tony Spilotro
2 years ago
in Bitcoin
Reading Time: 3 mins read
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Bitcoin’s halving is nearly a full month behind us, yet no new uptrend or post-halving selloff has happened. Oddly, Bitcoin price has traded relatively sideways since.

One metric that has changed since the halving, however, is the amount of BTC miners are dumping into the market. But why, and when will they begin to hold for higher prices?

Miners Rolling Inventory Shows Increase In BTC Dumping Post-Halving

Bitcoin’s recent halving was the most anticipated event the crypto asset has ever experienced. During past halvings, the crypto world had no idea what to expect in the days, weeks, and months following.

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But past cycles have shown that Bitcoin goes on parabolic rallies almost immediately after the block reward reduction.

Each halving cuts the BTC reward miners receive in half. The latest halving saw this figure drop from 12.5 BTC to just 6.25 BTC.

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The overnight reduction causes a sharp increase in the cost of production.

Analysts have long concluded that once this happened, miners would then start to hold their BTC for marked-up prices rather than sell at a loss.

But the opposite has happened – Bitcoin miners are dumping even more of their holdings than ever before, according to a metric called Miners Rolling Inventory.

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The Reasons Bitcoin Miners Are Dumping More Than Ever

Miners Rolling Inventory tracks the discrepancy between what miners receive each day in block rewards and what they move to exchanges to sell.

An MRI of under 100% suggests that miners are stacking their sats and holding them for higher prices.

Over 100% MRI indicates that miners are moving more than they are generating each day, thus tapping into reserves.

Following the halving, not only did miners not slow down their selling of BTC as expected, they have begun tapping into reserves. But why?

Related Reading | Bitcoin Hash Ribbons Indicate Post-Halving Miner Capitulation Has Begun

The reason is simple: to make up for lost revenue.

The cost of production doubled as soon as the halving hit. BTC that was mined for far cheaper is now being sold at a higher rate to offset losses incurred from the increase in operating expenses.

The weakest miners also may be closing up shop and selling off all remaining holdings, further skewing figures.

What’s interesting is that although the amount of BTC being sold by miners has increased sharply, Bitcoin price has yet to fall from the spike in selling.

All this new selling is being gobbled up by the likes of Grayscale Investments and eager crypto investors seeking to get in ahead of the next bull market.

Like all assets, valuations are dependent on supply and demand dynamics.

Demand growing while supply also grows explains the recent consolidation in Bitcoin.

Once all weak miners are purged and stockpiled reserves begin to run shrink, miners will have no choice but to begin to hold for higher prices or also will be forced to capitulate.

When the selling finally does slow, demand will take over, and the bull market will finally be ready to begin.

Tags: bitcoinbtcbtcusdBTCUSDThalvingminersxbtusd
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a global remote work leader with a decade of award-winning content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter at @tonyspilotroBTC and feel free to drop me a line if you would like to work together.

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