Bitcoin (BTC) miners were selling their reserves ahead of the halving and spot exchange-traded funds (ETFs) in the US may have “spread out potential selling pressure”, helping to avoid a sharp price drop alongside the event, according to Bitfinex. .
“It appears that miners executed their sales in advance, which proved beneficial for the market in the short term,” the crypto exchange wrote in its weekly market report on April 22.
He cites CryptoQuant data showing that in March, a daily average of 374 BTC was sent by miners to exchanges, down more than 70% from February’s daily average of 1,300 BTC, or l The equivalent of $86.4 million.
“We assume that miners were already selling their BTC holdings or collateralizing them to upgrade their machines and infrastructure,” Bitfinex wrote.
Cointelegraph Markets Pro shows Bitcoin has risen about 4.5% to $66,597 since the April 20 halving, continuing a rise that began April 17 after hitting a more than 40-day low at minus of $60,000.
Miners typically see their revenue decline after a halving, the report explains – this time, their rewards were reduced to 3.125 BTC per block mined, or around $208,000 at current prices.
During previous halvings, miners exerted “significant selling pressure” in an attempt to maximize their profits before their revenue streams were essentially reduced by 50%, which in turn could lead to a “ increased volatility and lower prices” in the short term, Bitfinex added.
But rising prices and expanding mining operations typically follow to “compensate for reduced rewards” and the negative market effects “are often temporary, as market dynamics adjust.” he wrote.
Bitcoin ETFs Help Halve Impact
Institutional demand for new spot Bitcoin ETFs in the United States may also have mitigated a potential price drop caused by Bitcoin’s new reward schedule, Bitfinex adds.
“Large-scale” ETF flows – reaching $192 million in outflows from Bitcoin investment products last week – can “significantly influence market sentiment and prices” and are often detached from the “usual framework between supply and demand,” he added.
“The added momentum of the ‘supply shock’ induced by the halving, the combination of ETF demand and limited supply could lead to further BTC price appreciation.”
The crypto exchange noted that ETF flows have slowed since their launch in January and have occasionally seen net outflows – but have still seen “strong interest.”
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The amount of Bitcoin that ETF issuers have purchased for their funds has also outpaced the creation of new BTC since launch, which Bitfinex expects will tighten significantly.
Bitfinex estimated, based on issuance trends, that as little as $30 million worth of Bitcoin could be supplied to the market per day after the halving, while average daily net inflows to ETFs “eclipse that figure at more than $150 million,” he writes.
So far, total ETF demand has exceeded supply by more than 150,000 BTC, Bitfinex wrote. “We expect this trend to continue in the coming months.”
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News Source : cointelegraph.com
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