Bitcoin ETFs Trigger Massive Miner Outflows, Over $1 Billion Moved to Exchanges
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Bitcoin miners reportedly sell their asset reserves or leverage them to upgrade their capacity as inflows to cryptocurrency exchanges continue.
A new report from Bitfinex Alpha Market shows Bitcoin ETF approvals by the United States Securities and Exchange Commission (SEC) impacted miners’ reserves.
In Bitfinex Alpha, this week we explain how Bitcoin miners have been putting pressure on the $BTC price 📊
Miners are driven by the price surge and the need to realise capital in order to upgrade mining equipment ahead of the Bitcoin halving.https://t.co/7ocyBJU9H5 pic.twitter.com/eqJiT4ssf4
— Bitfinex (@bitfinex) February 5, 2024
According to the report, miners’ asset reserves have plunged to 1.826 million, marking the lowest point since June 2021 as miners hoarded parts of profits during the bear season 2022.
On Jan 12, a day after the approval of ETFs, $1 billion worth of miner BTC was moved to exchanges, setting a six-year high in miner outflows according to data from on-chain analytics firm Glassnode.
This occurred as the price of Bitcoin declined close to 9% after the approval of several spot Bitcoin ETFs.
Though the reverse was expected, multiple analysts commented on the huge inflows in Q4 2023 as reasons for a slight decline upon approval. However, huge weekly inflows have been seen around the market leader on the institutional front.
Net Bitcoin Outflows Flagged by Analysts
On Feb 1, Bitfinex analysts noted a massive 13,500 BTC leaving miner wallets to exchanges, setting another record as the highest negative outflow.
However, the next 24 hours saw an inflow of approximately 10,000 BTC, bringing the net outflow to 3,500 BTC and 10,200 BTC since the approval.
The inflows recorded afterward can be linked to miners rebalancing their positions ahead of key events. The analysts point toward operational liquidity, strategic adjustments, and the price surge of 2023 as reasons for the net outflows.
During the bear cycle, miners suffered huge losses, leading to outright selling mining equipment, pivoting to other fields, and leveraging reserves to stay afloat.
However institutional entry recorded in 2023 sparked a price action in favour of miners, wiping out losses as they looked towards expansion.
“This substantial transfer of BTC from miners to exchanges reflects the miners’ response to market conditions and potentially their need to liquidate holdings for operational expenses of risk management.”
The flow of miners’ Bitcoin reserves to exchanges is an important metric as it shows the amount of BTC accumulated by miners over a certain period. It also shows the current market stance as outflows to exchanges usually represent an intention to sell.
Halving Influences Miners’ Decisions
The upcoming Bitcoin halving is a factor affecting the recent offloading of assets to exchanges with miners raising capital to expand their capacity and machinery.
The halving will see rewards slashed by 50% spurring Bitcoin miners to look for more effective rigs.
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