Bitcoin Miners Could See Relief from Selling Pressure as Profitability Increases

Bitcoin (BTC) miners could experience a reduction in selling pressure in the near future due to a combination of factors that have led to an increase in their profitability and the recovery of their hashrate. Despite the recent rally of Bitcoin to the $69,000 range, the network’s hashrate has shown signs of recovery, with only a 3% drawdown from its all-time high compared to 8% in early July.

Miners have witnessed an uptick in profitability, with their earnings reaching levels not seen since the Bitcoin halving in April. The Miner Profit/Loss Sustainability metric indicates a growth in miner revenues relative to the mining difficulty, suggesting that miners may not need to sell their holdings to cover operational costs. The recent rally in Bitcoin’s price has also led to a 50% increase in daily miner revenues, now totaling around $32 million compared to a low of $22 million earlier this month.

As profitability and revenues rise, Bitcoin outflows from miners have decreased significantly. Daily outflows, which reached 10,000-20,000 BTC when Bitcoin surged to $70,000 in March, have dropped to 5,000-10,000 BTC in July. Interestingly, larger mining entities have been accumulating more Bitcoin, with a total balance of 65,000 BTC compared to 61,000 BTC at the beginning of the year, while smaller miners have been selling off their holdings, resulting in a decrease from 59,000 BTC to 51,000 BTC within the same timeframe.

Despite the positive developments in profitability and hashrate recovery, miners may still face challenges ahead. There is a risk that fees could remain at “depressed levels” if miner profitability continues to be too dependent on Bitcoin’s price. The dynamics between larger and smaller miners also suggest a shift in behavior, with smaller miners being more inclined to sell their Bitcoin after the halving event.

Overall, the current landscape of Bitcoin mining points towards a potential reduction in selling pressure from miners due to increased profitability and revenues. This could have a positive impact on the overall stability of the Bitcoin market, as miners may be less inclined to offload their holdings in the face of rising profits.