The amount of Bitcoin that cryptocurrency miners have on hand to be sold has reached its highest level in over two years, and if history repeats, this may lead to Bitcoin’s price tumbling in the near term.
There have been several instances where high Bitcoin (BTC) miner OTC balances were followed by Bitcoin price drops of up to 63% within just a few months.
“Historically, increases in Bitcoin OTC desk balances have been associated with declines in Bitcoin prices,” according to an Aug. 21 CryptoQuant report.
OTC desk balances can suggest major selling
Bitcoin OTC desk balances for miners have reached a level not seen since June 2022 after a massive 70% surge over the last three months. Data shows it has now reached 368,000 Bitcoin, or approximately $22.36 billion.
“The substantial rise in OTC desk balances suggests significant selling activity among miners,” CryptoQuant added.
Bitcoin OTC balances from miners reaching highs has typically been followed by Bitcoin’s price tumbling. Source: CryptoQuant
In May 2018, after Bitcoin OTC desk balances spiked above 400,000 BTC, the price of Bitcoin was $8,475. By December 2018, the price had plummeted 63% to $3,183.
Similarly, in November 2021, when Bitcoin’s price was around $64,000 and OTC desk balances for miners were at an all-time high near 500,000 Bitcoin, the asset’s price declined by 45% to $35,058 just two months later in January 2022.
CryptoQuant explained that miners opt for OTC deals to sell Bitcoin because they seek “better execution” and want to avoid impacting the price of Bitcoin as significantly as they would if selling on crypto exchanges due to the higher liquidity in the OTC market.
However, the recent decline in Bitcoin supply on crypto exchanges and Bitcoin whales accumulating 94,700 coins over the past six weeks may balance out the selling pressure and support Bitcoin’s price.
Miners still struggling after Bitcoin halving
It follows rising operational costs and reduced mining rewards since the April Bitcoin halving.
The average Bitcoin miner is currently producing at a loss. According to MacroMicro and CoinMarketCap data, the average cost to mine a Bitcoin is $72,224, while Bitcoin’s current price is $60,797.
Related: Bitcoin mining expenses surge 168% amid capacity growth
Bitcoin commentator Colin Harper explained that “every miner earned less in Q2 than Q1, but some were better at shoring up the revenue reduction than others by expanding their hashrate over the quarter” in an Aug. 22 X post.
Major crypto mining firms saw a decline in revenue in Q2 2024 compared to Q1. Source: Colin Harper
“Every public miner in our update has taken pains to upgrade their fleets to the latest equipment,” Harper added.
On Aug. 18, VanEck suggested that Bitcoin miners have the opportunity to potentially generate around $13.9 billion in additional yearly revenue if they partially transition to providing energy to the artificial intelligence and high-performance computing (HPC) sector by 2027.
“AI companies need energy, and Bitcoin miners have it,” VanEck stated.
Magazine: Bitcoin miners steamrolled after electricity thefts, exchange ‘closure’ scam: Asia Express
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.