A new report from crypto exchange Bitfinex shows that the approval of a Bitcoin ETF by the US Securities and Exchange Commission (SEC) has impacted miner reserves. Those, in turn, put pressure on the price of the main cryptocurrency. Bitcoin miners are selling their asset reserves or using them to upgrade their capacity as the influx of funds into cryptocurrency exchanges continues. They are driven by rising prices and the need to realize capital to upgrade mining equipment before the halving.
A new report from crypto exchange Bitfinex shows that the approval of a Bitcoin ETF by the US Securities and Exchange Commission (SEC) has impacted miner reserves. Those, in turn, put pressure on the price of the main cryptocurrency. Bitcoin miners are selling their asset reserves or using them to upgrade their capacity as the influx of funds into cryptocurrency exchanges continues. They are driven by rising prices and the need to realize capital to upgrade mining equipment before the halving. Why miners are being forced to sell Bitcoin According to the report, miner asset reserves fell to 1.826 million, the lowest since June 2021, as companies stockpiled some of the mined coins during the 2022 bear season. On January 12, the day after the ETF was approved, $1 billion worth of mined BTC was transferred to exchanges, setting a six-year high in miner outflows, according to analytics firm Glassnode. This comes as Bitcoin's price fell nearly 9% following the approval of several spot Bitcoin ETFs. While the opposite was expected, many analysts cited the huge inflow of funds in the fourth quarter of 2023 as the reason for the slight decline following approval. However, there has been a huge weekly inflow around the market leader on the institutional front. Dynamics of Bitcoin net outflow On February 1, Bitfinex experts noted that 13,500 BTC left the wallets of miners on exchanges, setting another record as the highest negative outflow. However, in the next 24 hours, inflows were around 10,000 BTC, resulting in net outflows of 3,500 BTC and 10,200 BTC since approval. The inflows recorded subsequently may be due to mining companies rebalancing their positions ahead of key events. Analysts point to operating liquidity, strategic adjustments and rising prices in 2023 as reasons for net capital outflows. During the bear cycle, mining companies suffered huge losses, leading to outright sales of equipment and the use of reserves to stay afloat. Halving influences miners' decisions However, the entry of institutional investors recorded in 2023 triggered a price movement in favor of miners, offsetting losses as they sought expansion. “This significant transfer of BTC from miners to exchanges reflects companies’ response to market conditions and perhaps their need to liquidate assets to cover operational costs of risk management.” The flow of Bitcoin miners' reserves to exchanges is important because it shows the amount of BTC accumulated by miners over a certain period. It also reflects the current market situation as outflows to exchanges usually represent intention to sell. The upcoming Bitcoin halving is a factor in the recent unloading of assets onto exchanges, with miners raising capital to expand their capacity and equipment. As a result of the halving, rewards will be reduced by 50%, which will encourage Bitcoin miners to look for more efficient rigs. Negative investor sentiment could be a harbinger of a bullish run At the moment, although there is a general lull in the cryptocurrency market, popular online data platform Santiment said that downward negative sentiment has prevailed in the market and among investors over the past week and this week. Santiment cited the market's inability to effectively exhibit the bullish pattern that traders have become accustomed to since the bull cycle that began last October as one of the reasons for the prevalence of negative sentiment. Stating that the negative sentiment here has become even stronger regarding the largest cryptocurrencies, Santiment emphasized that negative sentiment has appeared for the first time in more than six months. Finally, Santiment noted that there is a bullish signal behind the growing negativity towards BTC, ETH, XRP, BNB, ADA and SOL. Investors exhibiting anxiety, fear, or uncertainty regarding more than one major cryptocurrency indicate a high likelihood of a short-term surge. “There is a noticeable bearish sentiment permeating the cryptocurrency discourse this week as cryptocurrency market prices remain volatile and traders are unable to exhibit the usual bullish pattern they have become accustomed to since the start of the bull cycle in October. When investors start to worry and show Comfort dissatisfaction with a few large assets is a sign that market values are more likely to see an upcoming rebound. “Markets have historically moved in directions that people least expected, resulting in rallies that caught many short investors by surprise.”
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