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The Bitcoin price difficulties earlier this week appear to have been largely driven by a significant selloff by miners, commonly referred to as miner capitulation. On-chain data shows that the total amount of BTC held by miners has crashed massively in the last three days. In particular, these miners recently sold $1.71 billion worth of BTC in a short period of time. As you might imagine, this trend is concerning for Bitcoin, especially as the cryptocurrency is currently struggling to regain momentum and climb back above the critical $60,000 price level.
Miners Offloading Massive Amounts Of Bitcoin
According to on-chain data noted on social media by crypto analyst Ali Martinez, Bitcoin miners recently offloaded 30,000 BTC worth approximately $1.71 billion in the past 72 hours. Interestingly, such a massive selloff occurred during a marked increase in the mining difficulty.
Data from Mempool shows that the Bitcoin mining difficulty skyrocketed on Wednesday, September 11, to reach a new all-time high. Notably, the mining difficulty reached a record of 92.67 trillion, eclipsing the previous record of 90.67 trillion set in July. The mining difficulty essentially increases as more miners join to compete for the rewards for adding new blocks to the blockchain. The difficulty adjusts based on the number of active miners, with more miners leading to an increase in competition.
Since the last halving in April 2024, miner rewards have essentially been cut in half, leaving many of them wanting in terms of profit. For many smaller mining operations and even some large-scale players, this reduction in rewards has led to profitability concerns, as they now have to work harder and expend more computational power while earning less in return. The lack of a marked increase in the price of Bitcoin in the past few months has further exacerbated the plight of Bitcoin miners, leaving many no choice but to sell their holdings.
According to Santiment data, the total amount of BTC held by miners has dropped massively. Notably, the amount dropped from 2.23 million BTC in late July to around 2.14 million BTC, according to recent data.
Is The BTC Rally Officially Over?
As noted by Martinez, the miner selloff increased in the past 72 hours. Such large-scale selling from miners can exert substantial downward pressure on the price, further complicating Bitcoin’s efforts to recover.
It’s important to note that miner capitulation is not the only factor to determine the official end to a Bitcoin rally. Evidently, Bitcoin’s price has been stuck in a correction phase for over two months, and many market participants are already reneging on the hope for the resumption of an uptrend. However, Bitcoin has mostly held up over the strong $50,000 support level despite various selloffs. A resumption of institutional inflow into the market could see Bitcoin picking up the rally and breaking into a new all-time high.
At the time of writing, the first step is breaking above $60,000. Bitcoin is currently trading at $57,960 and is up by 2.4% in the past 24 hours.
Featured image created with Dall.E, chart from Tradingview.com
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