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While the price of Bitcoin hovers around $42,500, miners are observed to continue selling. The most likely reason for the increase in miner sales is a sudden drop in the network’s hashrate, which in turn affects miners’ profitability.
Bitcoin Miners Sold Over 10,000 BTC
Closely followed crypto analyst Ali Martinez highlighted a notable change in the behavior of Bitcoin miners, reporting an increase in their sales. According to data from Cryptoquant, miners sold approximately 10,600 BTC worth $455.8 million in the last 24 hours. The high volume of Bitcoin miner sales is a sign of dynamic market response.
During the severe winter storm that swept the US, miners were unable to draw electricity from the grids, leading to the lowest hashrate levels in recent months. This measure aims to ensure that essential services like hospitals have enough electricity to save lives and homes remain warm during harsh weather conditions.
Considered one of the most effective network balancing tools globally, the Bitcoin network’s hashrate dropped by a significant 34% from last Friday. The drop from 629 EH/s to 414 EH/s is associated with the Texas Electric Reliability Council’s (ERCOT) restrictions on electricity usage for businesses due to adverse weather conditions.
Spot Bitcoin ETFs May Be Absorbing Selling Pressure from Miners
On the other hand, despite the selling pressure from Bitcoin miners, the price of the largest cryptocurrency has managed to remain stable. One of the most likely reasons for this is the strong buying from substantial capital inflows into spot Bitcoin ETFs. In their first four days of trading, spot Bitcoin ETFs attracted approximately $900 million.
The hefty capital inflow into ETFs seems to be leading to strong BTC purchases in the open market. Meanwhile, Bitcoin mining companies’ stocks are underperforming after a strong rally in 2023.
According to the latest research report published by asset management firm Bernstein analysts on January 15, any decline in the shares of Bitcoin mining companies represents a clear buying opportunity. Currently, mining stocks face two significant challenges following the approval of spot Bitcoin ETFs. The first is the reduced interest of investors in using them as a proxy for Bitcoin’s price. The second is the largest cryptocurrency’s underperformance in price.
