Bitcoin reserves available to miners have dropped to level seen in July 2021. In recent days, miner reserves have fallen by more than 14,000 BTCs, approximately $600 mln. What is the reason for this? Why are reserves declining? Will this trend persist until the halving event and what will happen after that?
1. Some miners may be experiencing a current cash shortfall and are forced to sell part of their cumulative BTC holdings to cover operating expenses. Adverse weather conditions (extreme cold) in Texas forced some large miners in the US to shut down their rigs, reducing bitcoin output and the network load. What’s more, electricity prices have gone up.
2. Some miners have also stepped up selling, fearing a decline in the BTC price after the halving. In this case, it’s better to sell before the event. But then again, FOMO prevents a certain amount of selling.
3. Bitcoin rallied 155% in 2023. Some miners may take profit after a protracted uptrend, fearing a market crash. Other may have purchased equipment at a higher price than current prices and want to play it safe.
Ultimately, there is no definite answer as the risks and motives of different miners may vary. Most likely, this trend of decreasing miners' reserves will continue at least until the halving event. After this, much will depend on how the bitcoin price performs.
If bitcoin goes up, miners will start to stock up on it again. If the price heads south or remains at current levels, selling from mining pools will likely continue.
Since the SEC has approved spot bitcoin ETFs, $600 mln is a small amount for the market. It will be absorbed by institutional investors. Bitcoin has to be taken away from someone in anticipation of a future rally.