Selling pressure for Bitcoin miners decreases as BTC price rises above $47,000: CryptoQuant

An on-chain analysis by market research platform CryptoQuant has found that selling pressure from Bitcoin miners has eased and remained low despite a significant drop in transaction fees.

According to the company's latest weekly report, Bitcoin sold by miners daily is currently around 300 BTC, well below the company's 800 BTC daily sales in November and December 2023.

Selling pressure for Bitcoin miners remains low

Selling pressure from Bitcoin miners has remained low in 2024 as the largest publicly traded mining companies add to their inventory. This increase in corporate BTC holdings comes as miner profitability has declined by the largest amount in at least a year.

Analysts at CryptoQuant said that miners' profit/loss sustainability metrics show that these companies were “largely extremely” underpaid in 2024 due to fewer transactions on the Bitcoin network. The number of Bitcoin transactions has fallen from its all-time high of 731,000 per day in December to a three-month low of 278,000.

The decline in Bitcoin transactions is due to lower activity of Ordinals inscriptions and BRC20 tokens. This is also reflected in the number of transactions via Taproot addresses, which have plummeted by 76% since December.

“Lower transaction activity, and especially less use of Taproot addresses for inscriptions and BRC20 tokens, negatively impact Bitcoin transaction fees. In fact, total daily Bitcoin fees fell from 560 on December 15th to 53 on February 5th, a 90% decline, while Taproot transactions also fell,” analysts explained.

BTC investor demand is recovering

In addition to easing selling pressure from miners, downward pressure on BTC price has also eased as the asset falls towards the cost base of short-term holders and traders. Additionally, crypto exchange Coinbase’s BTC price premium shows that demand from Bitcoin investors in the US has recovered slightly.

Still, buyers in the derivatives markets have not regained enough control to sustain a significant price increase. Sell ​​orders continue to dominate, as evidenced by the buy-sell ratio remaining below zero. Nevertheless, the price of BTC has increased by several thousand in the last few days and even reached almost $48,000 on Friday.

Meanwhile, CryptoQuant's analysis contrasts with a report from Bitfinex a few days ago that attributed the recent decline in BTC price to a sales boom among Bitcoin miners. Bitfinex said miners are dumping their BTC reserves to provide capital and improve infrastructure in preparation for the upcoming Bitcoin halving.

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