One of the most amazing things about Bitcoin is how well placed the economic incentives are. How perfectly they work to keep the ecosystem flowing. Some of those incentives are so sophisticated, that it took crypto-enthusiasts a couple of cycles to really understand them. And it seems like the miners learned from the past and are holding the line with the rest of us.
Using a chart titled “Bitcoin: Trafic Volume from Miners to Exchanges,” Lex Moskovski chips in:
Some people are trying to blame miners for this sell-off.
But they have zero interest to kill #Bitcoin momentum.
So they behaved this time. pic.twitter.com/jDIIOPadK2
— Lex Moskovski (@mskvsk) April 23, 2021
We know mining is a costly enterprise and that, those who do it, have to sell their stock in order to invest in their business and remain competitive. Nevertheless, there’s a time and a place for everything, and the time for selling was on the way up. When that happened, Bitcoinist reported:
On the way up, a critical cog in the Bitcoin puzzle, miners, have been dumping BTC all along. In total, miners have poured more than 666,000 BTC into the market during a time when few are selling their coins, and exchange reserves continue to dwindle.
Nowadays, with the market on a bearish period and morale plummeting, they stuck to their guns and held the line. They’re acting out of self-interest, as they should. The incentives are there to inspire them to act that way. Nevertheless, we at Bitcoinist commend the miners for holding.
BTC price chart on Gemini | Source: BTC/USD on TradingView.com
Why Aren’t Bitcoin Miners Selling?
Among the probable factors driving this behavior, back in March, the miners broke all records and received a total of $1.5B in rewards. Also, new mining equipment will hit shelves by the end of the year, so they might be waiting for that to happen.
It’s also worth noting that there’s no evidence to suggest that miner’s sell-offs affect the price of Bitcoin. About that fact, Bitcoinist said:
Historically, there has been little correlation between Bitcoin price and miner behavior. Research from Clain, a Crypto analytics company, supports this claim further. There was no proven statistical significance between the price action and the volume of Bitcoin that miners sold to exchanges–at least up to 2019.
Related Reading | Perspective: Long-Term Bitcoin Chart Shows How Far Away The Top Could Be
Last but not least, a curious fact is that miners started accumulating BTC just before this bearish period. About the chart below, Bitcoinist said: “miners have increased their positions in Bitcoin substantially after offloading what they could during the rally.”
Miners stopped selling BTC after dumping some 666,000 BTC on the market | Source: Arcane Research
Key questions remain unanswered. If the miners are not the ones selling, who is? Where is this tremendous force coming from? Who is pulling the market’s strings? Or is this just the market in action, correcting itself, looking for a way to gain momentum?
We’ll have the answer to those questions soon enough. In the meantime, hodl the line!
Photo by Pedro Henrique Santos on Unsplash - Charts: TradingView