Last update:
February 8, 2024 5:28 pm EST | 2 minutes read
Source: Cryptonews.com
Bitcoin is up over 4% in the last 24 hours, approaching the $45,000 threshold for the first time since mid-January. At the time of reporting, Bitcoin was trading at around $44,800, up 4.6% intraday and a notable 6.3% increase over the past week.
While the inflow of funds into new spot Bitcoin ETFs has attracted a lot of attention, according to data from CryptoQuant, it is miners' selling activity that has dampened Bitcoin (BTC) prices recently.
Bitcoin miners resist selling despite profit declines
Data from CryptoQuant shows that miner reserves, which represent the amount of Bitcoin held in miners' treasuries, have seen net outflows since the launch of Bitcoin exchange-traded funds (ETFs) in mid-January. These reserves now have crashed down to its lowest level since June 2021.
Miners have significantly reduced their daily Bitcoin sales, from over 800 BTC at the end of 2023 to under 300 BTC at the beginning of 2024. This strategic shift indicates a change in how miners approach their holdings, with large publicly traded Bitcoin mining companies Companies in the US reported an increase in their BTC reserves despite a decline in profitability.
Despite a decline in profitability, the sharpest in over a year, miners have chosen to hold on to their assets rather than sell them. Data from CryptoQuant suggests that miners have been significantly underpaid in 2024, but selling pressure remains muted.
The Bitcoin network also saw a decline in transactions, falling from a daily all-time high of 731,000 in late December 2023 to a three-month low of 278,000. This decline is due to reduced activity in inscriptions and BRC-20 token transactions, particularly those using Taproot addresses, which saw a 76% decline.
As a result, Bitcoin transaction fees fell by 90% from mid-December to early February. CryptoQuant explained;
“Miner selling pressure has remained low so far in 2024, even after miner profitability fell by the largest amount in at least a year. Miners have mostly been extremely underpaid so far in 2024.”
Bitcoin price is rising due to growing interest from whales and speculation about the Federal Reserve's monetary policy
Further supporting Bitcoin’s uptrend is the increasing interest from large investors or “whales” who are actively accumulating Bitcoin. Insights from the on-chain analytics platform LookOnChain discover significant movements, such as B. Withdrawals totaling 2,741 BTC worth approximately $118 million from Binance just before the price spike.
The rise in Bitcoin price follows reports suggesting that the Federal Reserve is unlikely to cut interest rates in March, in line with market expectations. Comments from Boston Fed President Susan Collins hinting at possible rate cuts “later this year” echo the views of Cleveland Fed President Loretta Mester. The prospect of future interest rate cuts appears to have created volatility in the cryptocurrency space and increased investor appetite for risk.
The increased selling activity coincides with the upcoming Bitcoin halving scheduled for April, a quadrennial event in which miners' reward for securing the Bitcoin blockchain is halved. Analysts at Bitfinex explained that the halving is expected to have a significant impact on miners' profitability, potentially forcing smaller, less efficient operations out of business or forcing them to merge with larger companies in order to survive.
Notably, the broader cryptocurrency market is also experiencing a surge, with the total market capitalization of all cryptocurrencies increasing by over 3% to $1.79 trillion. Among the top 10 cryptocurrencies by market cap, Cardano and Solana emerged as top gainers in the last 24 hours, with Cardano up 11.5% to $0.534 and Solana up 7.4% to 101.82 $ recorded.
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