Before the green light for spot Bitcoin exchange-traded funds (ETFs), the crypto sphere anticipated a bullish surge. Even with the leading asset surpassing the $49,000 mark after the US Securities and Exchange Commission’s (SEC) green signal for 11 spot BTC ETFs, prices took a downturn following the trading debut of eight of them.
Hovering below $43,000, Bitcoin appears to have been trapped within a tight trading range for more than two weeks now. As such, miners resorted to offloading a significant amount of their BTC holdings. Despite this, data suggest that concerns regarding capitulation appear to be minimal.
No Death Cross Detected
Mining rewards represent the main income stream for miners, making up over 80% of their earnings. If the price of Bitcoin drops or the hash rate goes up, leading to higher mining expenses such as electricity and time, miners could encounter significant difficulties. As a result, they are generally more responsive to market changes than investors, yet they also exhibit stronger resilience.
CryptoQuant’s Hash Ribbon, which analyzes the Hashrate 30DMA and 60DMA to detect miner capitulation and market rebound, hasn’t shown a death cross despite the recent downward adjustment.
By examining previous bear market lows and bottoms where miner capitulation selling occurred at an MPI index level of 4.0, the on-chain intelligence platform concluded that the current adjustment doesn’t indicate miner capitulation.
However, the MPI experienced a notable uptick in 2023, largely due to mining industry efforts to sell the leading asset to ease financial strain during the bear market. Alongside the Bitcoin ETF rally, miners offloaded significant amounts of BTC in January 2024, possibly as a proactive measure ahead of future halving events.
Based on the Hash Ribbon analysis, CryptoQuant found that worries about capitulation seem insignificant. Moreover, it appears that miners have already raked in sufficient profits and bolstered their financial standing. This implies that miners are equipped to endure possible further corrections in the Bitcoin market down the line.
Offloading Bitcoin Stash
Bitcoin miners witnessed substantial profits in 2023 due to a surge in transaction fees, which have reached their highest levels since April 2021, primarily driven by increased demand for Ordinals inscriptions.
The positive market momentum throughout this year has provided a significant recovery for miners, offsetting the challenges faced during the unfavorable conditions of 2022. With the market recovery in the latter part of 2023, miners offloaded a significant amount of their stash.
Leading up to the much-anticipated introduction of spot Bitcoin ETFs, the sell-off by Bitcoin miners continued. This increased selling activity was expected to have notable effects on the market. Even short-term Bitcoin investors joined in the selling. However, unlike miners who were capitalizing on profits, these short-term holders were selling at a loss.
However, Bitcoin whales likely viewed this as an advantageous buying opportunity, leading them to acquire the asset being sold by short-term investors. As a result, the market remained relatively stable despite the ongoing selling activity.