Why Are Bitcoin Miners Moving An “Unusually” Large Amount of BTC?

Tony "The Bull" Severino

1 year ago

3 mins read

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Bitcoin is an asset unlike any other. Not only are prices impacted by normal market participants buying and selling, but miners powering the underlining network with massive BTC reserves can also have an even greater effect.

Several large miners were seen moving “unusually large” sums of BTC overnight, just ahead of the massive market collapse. Could they be responsible for the most recent plummet in Bitcoin price below $11,000? And why are these miners suddenly selling their cryptocurrency when the asset is supposed to be in a new bull market?

Blockchain Data Shows Massive BTC Mining Pool Outflows Ahead of Crypto Market Collapse

When Bitcoin was created, it gave birth to new financial technology. There’s the cryptocurrency itself, and then there is the blockchain network these tokens underpin.

The health and function of these networks, as well as how decentralized they are can have a dramatic impact on the value of an asset.

Take Ethereum Classic for example. Repeated 51% attacks have hindered the altcoin’s valuation. Supply and demand also impact valuations, along with the constant push and pull of market buying and selling.

The miners that help secure and operate the Bitcoin network, often need to sell the cryptocurrency in order to fund operations. Miners may wait until prices are higher to do so. With Bitcoin trading over $10,000 over the last couple of months, miners may have decided it was the right time to offload some supply.

According to fully transparent blockchain data, miners began moving an “unusually large” sum of BTC to exchanges. Bitcoin had already fallen below $12,000 at that point.

Miners are moving unusually large amounts of #BTC since yesterday. #Poolin, #Slush, #HaoBTC have taken the bitcoins out of the mining wallets and sent some to the exchange.https://t.co/NcLmXvZmOD pic.twitter.com/N3E3mX4QKn

— CryptoQuant.com (@cryptoquant_com) September 3, 2020

Is The Feared Post Halving Death Spiral About To Hit Bitcoin?

After the asset failed to set a higher high, miners may have taken that as a sign the uptrend was over, and decided to de-risk. Whatever the reason, the extra supply of BTC dumping into the market may have caused an even sharper drop.

Although after Bitcoin’s halving, the asset is expected to begin its next bull run, a post-halving miner death spiral has been expected. This only happens when Bitcoin price falls below the cost of production. Because the cryptocurrency’s cost to produce each BTC doubles with each halving, the sudden change in miner revenue was expected to prompt a selloff.

BTCUSD Daily Bitcoin Cost of Production | Source: TradingView

Rising Bitcoin fees were said to prevent such a death spiral from happening, but what will take place if the current selling pushes Bitcoin far below the cost of production?

In fact, Bitcoin is now trading slightly below the cost of production, and any fall lower could lead to past examples such as the November 2018 drop and the recent Black Thursday collapse. Is that’s what is next for the crypto market?

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

Beyond his role at NewsBTC, Tony is the visionary founder of CoinChartist.io, an educational platform aimed at demystifying the nuances of cryptocurrency trading. CoinChartist.io serves as a valuable resource for traders seeking to enhance their technical analysis skills. The platform offers a range of learning tools and resources designed to empower traders with the knowledge to make informed trading decisions.

In addition to his educational initiatives, Tony is a prolific author and a dominant voice in the crypto community. He writes the CoinChartist VIP newsletter, a weekly dispatch that has become a staple among crypto enthusiasts, revered for its insightful analysis and actionable trading advice. This newsletter has consistently ranked as a best-seller on SubStack, boasting thousands of subscribers who rely on Tony’s expertise to guide their trading strategies.

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Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.

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