Data shows: Miners cause BTC price fluctuations, causing BTC price to fall in 2018

Bitcoin miners are responsible for the volatility in prices that saw the digital currency hit $3,100 in 2018, new data shows.

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Miners sell off before Bitcoin price hits bottom

In a new analysis uploaded to social media on Oct. 11, on-chain intelligence resource Token Analyst showed that miner selling directly affected the price of Bitcoin. Specifically, the massive sell-off coincided with the BTC/USD drop to $3,100 at the end of last year. Large amounts of Bitcoin were transferred to exchanges in June and August, "driving prices further down."

Token Analyst concluded:

“We’re seeing miners taking advantage of the volatility and selling heavily.”

Bitcoin mining chart

The data follows previous findings from Elias Simos, senior research analyst at Decentral Park, who tracked bitcoin mining rewards over time in August and found that before the 2016 block reward halving, more independent miners were receiving those mining rewards.

“In the beginning, 70% of mining rewards went to non-pool-affiliated entities. Now that number is around 25%,” Simos found. He described the current mining period as the “era of professional mining.”

Miners and Price Control

The data from Token Analyst adds momentum to theories about the overall role miners play in determining Bitcoin’s price.

As previously reported, prominent commentators have also become increasingly aware of the phenomenon. Chief among them is PlanB, whose stock-to-flow Bitcoin price model has demonstrated the importance of miner participation.

Another prominent hypothesis supported by Filb Filb, Cole Garner, and others revolves around miners maintaining the lowest BTC price.

This week, Garner cited the thinking of bitcoin creator Satoshi Nakamoto, who in 2010 claimed that the price of a commodity “tends to skew toward the cost of production.”

"If the price is below cost, then production slows down. If the price is above cost, then profit can be made by producing and selling more."

Therefore, miners are unlikely to sell below $6,400 under current conditions, leading to the conclusion that this figure represents a new price floor for Bitcoin.

The next halving in May 2020 is a critical moment for everyone. As in 2016, after the block reward drops to 6.25 BTC per block next year, the overall trend should begin to establish new price highs.