Bitcoin has surged over 4% in the past 24 hours, edging closer to the $45,000 threshold for the first time since mid-January. At the time of reporting, Bitcoin was trading at approximately $44,800, marking a 4.6% increase within the day and a notable 6.3% surge over the past week.
While the influx of funds into new spot bitcoin ETFs has captured considerable attention, according to CryptoQuant data, it’s the selling activity by miners that has been restraining bitcoin (BTC) prices in recent times.
Bitcoin Miners Resist Selling Despite Profit Declines
Data from CryptoQuant reveals that miner reserves, representing the amount of bitcoin held in miner treasuries, have experienced net outflows since the debut of bitcoin exchange-traded funds (ETFs) in mid-January. These reserves have now plummeted to their lowest level since June 2021.
Miners have notably scaled back their daily sales of Bitcoin, reducing them from over 800 BTC in late 2023 to below 300 BTC in early 2024. This strategic shift suggests a change in miners’ approach to their holdings, with major publicly traded Bitcoin mining firms in the U.S. reporting an increase in their BTC reserves despite a dip in profitability.
Despite facing a decline in profitability, the steepest in over a year, miners have opted to hold onto their assets rather than sell them. Data from CryptoQuant indicates that miners have been significantly underpaid in 2024, yet selling pressure remains subdued.
The Bitcoin network has also experienced a downturn in transactions, dropping from a daily all-time high of 731,000 in late December 2023 to a three-month low of 278,000. This decline is attributed to reduced activity in inscriptions and BRC-20 token transactions, particularly those utilizing taproot addresses, which have seen a 76% decrease.
Consequently, Bitcoin transaction fees plummeted by 90% from mid-December to early February. CryptoQuant stated;
“Miner selling pressure has remained low so far in 2024, even after miner profitability decreased by the largest amount in at least a year. Miners have been mostly extremely underpaid so far in 2024.”
Bitcoin Price Surges Amidst Growing Interest from Whales and Speculation on Federal Reserve’s Monetary Policy
Further supporting Bitcoin’s upward trajectory is the increasing interest from large-scale investors, or “whales,” who are actively accumulating Bitcoin. Insights from the on-chain analytics platform LookOnChain reveal substantial movements, such as withdrawals totaling 2,741 BTC, valued at approximately $118 million, from Binance just before the price surge.
The surge in Bitcoin’s price comes on the heels of reports suggesting that the Federal Reserve is unlikely to lower interest rates in March, aligning with market expectations. Comments from Boston Fed President Susan Collins, indicating potential rate cuts “later this year,” echo sentiments expressed by Cleveland Fed President Loretta Mester. The prospect of future rate cuts appears to have injected volatility into the cryptocurrency space, fueling investors’ appetite for risk.
The heightened selling activity coincides with the upcoming Bitcoin halving scheduled for April, a quadrennial event that halves the reward to miners for securing the Bitcoin blockchain. Bitfinex analysts explained that the halving is expected to significantly impact miners’ profitability, potentially driving smaller, less efficient operations out of business or compelling them to merge with larger companies to survive.
Notably, the broader cryptocurrency market is also experiencing an upswing, with the total market capitalization of all cryptocurrencies climbing over 3% to reach $1.79 trillion. Among the top 10 cryptocurrencies by market capitalization, Cardano and Solana have emerged as top gainers in the past 24 hours, with Cardano witnessing an 11.5% surge to $0.534 and Solana rising by 7.4% to $101.82.
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