Bitcoin miners have been dumping their HODLings over the past few months. As reported previously, a new generation of ‘forced’ Bitcoin sellers slid into the picture in May and June, and the intensity of selling has weakened since then.
The latest data from Arcane Research showed that public miners “only” sold 6,200 BTC in July. As illustrated below, the same is less than half the amount they sold the previous month. However, per the analytics and research platform,
“Even after this decline, July was still the second-highest BTC selling month in 2022 for the public miners, indicating that they are still in a difficult financial position.”
Well, the same sell bias has also been rolled over to August. Per data from CryptoQuant, the cumulative miner reserve stood at 1.8649 million on 1 August. However, press time reflected a depleted value of 1.86048, implying that more than 4400 coins had already been sold in the first half of August. If miners continue selling with the same momentum, then it is likely that this month’s figures will surpass last month’s.
It should be noted that Arcane’s report only focuses on public miners, while CryptoQuant’s data considers all miners.
Why are Bitcoin miners selling?
Miners usually dispose of their holdings to cater to expenses at times of liquidity crunches. However, of late, the situation has been slightly different. Public miners sold 158% of their bitcoin production in July, making it the third month in a row where they sold more than 100% of production.
Selling more than what is being produced single-handedly points to the fact that miners are still under pressure. Per Arcane Research, one of the main reasons that Bitcoin miners were selling was to avoid margin calls. Elucidating on the same, the analytics and research platform’s report noted,
“Miners with significant BTC or machine collateralized debt positions were forced to sell BTC to avoid margin calls.”
Public miners also have “significant upcoming expenses” for their “massive” expansion plans. To fund the same, they’ve again been selling.
“The public miners’ expansion plans go several months into the future, and they are selling some bitcoin now to get their bank accounts ready for future dollar-denominated payments.”
Future outlook
Bitcoin’s hash ribbons have been flashing light green circles of late, indicating that miner capitulation is in play. To tread through this phase, they’ll have to continue selling their HODLings.
Despite miners sending their assets to exchanges, Bitcoin did recover in July. So now, the selling will likely not cause much of a dent unless the macro-sell spree, involving other participants like investors, begins.
Concerning what to expect next, the author of Arcane’s report noted,
“I expect the selling pressure to continue at between 100% and 150% of production unless something significant happens to the bitcoin price. This is equivalent to between 4,000 and 6,000 BTC per month.”
