Bitcoin miners send bitcoins to exchanges in Q2 to 12-month low

Data from Chainalysis on daily miner selling activity, measured as a percentage of bitcoin sent to exchanges, fell to a 365-day low since the second quarter. The metric had been on a downward trend throughout the April-June period.

Bitcoin miners are cash king and are constant sellers in the market, liquidating at least a portion of their holdings every day to cover their operating costs.

“It appears that miners are expected to sell higher on Bitcoin in at least the coming months,” CoinDesk research analysts noted in a quarterly report.

Indeed, like other sellers, Bitcoin miners are subject to the law of supply, which states that, other factors being constant, the price and supply of a commodity are directly related to each other.

They tend to hoard Bitcoin when prices are expected to rise, and are willing to sell more in the future at higher prices. This is because the profitability of mining is largely affected by Bitcoin price fluctuations.

Therefore, the decline in daily miner selling observed in Q2 could be considered a sign of bullish price expectations among miners.

Bloomberg analysts predicted in May that the cryptocurrency could challenge its all-time high of $20,000 by the end of December.

However, not all analysts agree that the miner hoarding is a bullish sign. Charlie Morris, founder of data site ByteTree, told CoinDesk in March that miners tend to hoard coins when they believe that the market lacks momentum to absorb excessive trading volume. After all, mining pools account for the largest share of Bitcoin mining and the highest percentage of total Bitcoin flowing into exchanges. Therefore, they must be particularly careful when increasing supply, as their actions can lead to large-scale sell-offs.

So far, Bitcoin has failed to fully reflect the reduction in miner selling pressure. The derivatives market is not so optimistic. Options market data shows that traders expect prices to fall back in the short term.

According to a weekly research report released by Glassnode, Bitcoin is attracting a large amount of capital inflows from the stablecoin market. The report pointed out that the net supply of stablecoins anchored to the US dollar has soared, exceeding that of Bitcoin. The demand for such stablecoins is rising, and traders and investors can use new stablecoin repositories to inject funds into the Bitcoin market. These stablecoin funds tend to improve the liquidity of the cryptocurrency market. Traders use them to buy or sell cryptocurrencies without the involvement of banking institutions and seek stability during periods of high trading volatility. The report concluded that the more funds in the stablecoin market, the greater the possibility that Bitcoin will start a new round of price increases in a short period of time.