According to some experts, miners could potentially liquidate $5 bln worth of bitcoin reserves, creating downward price pressure. Should we expect to see a sell-off? And if so, how big could it be? With BTC going up due to halving, what would be the point of a sell-off?
There are several reasons why miners might opt to sell:
1. Reducing the block reward by half after halving will lead to a sharp decline in miners’ revenue. According to various experts, this could cost them $10 bln in losses over the course of a year. To reduce these losses, it would make sense for them to start selling part of their accumulated bitcoins.
2. Historically, after previous bitcoin halvings, the price of the coin initially trended sideways for several months before starting to rise. Some people expect such a trend this time as well, with the price going down after the halving, followed by a new bull run. Therefore, miners can take advantage of the lull to engage in profit-taking.
3. Large miners such as Marathon hold large bitcoin reserves accumulated over previous years. Selling off part of these reserves will allow them to smooth out their decline in income and offset expenses after the halving event.
That said, one might ask: if the bitcoin price is expected to rise as a result of the halving, why would miners rush to sell? In the short term, maintaining financial stability is more important to them than anticipating higher future prices. Otherwise, the company may not survive to see new growth.
Despite the expected rally in bitcoin after the halving event, miners could opt for heavy selling over the coming months. If there are no new military conflicts affecting risk assets, then the supply of miners may be absorbed by spot bitcoin ETFs. This could be a significant factor that will reduce pressure on the price of the leading cryptocurrency in the short term.