Bitcoin remains in the red with a drop of 10% over the past week. The number one crypto by market cap is still consolidating at its current levels after a major crash, hitting a multi-year low of $17,500.
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At the time of writing, BTC price is trading at $20,400 with a sideways movement over the past 24 hours.
As several outlets are reporting, bitcoin miners are reducing their BTC holdings. This contributed to the selling pressure and the price of BTC declined from the $30,000 area to its current levels.
A recent report by analytics firm Coin Metrics took note of the addresses of BTC miners, and funds inflows, downplaying the real impact of bitcoin’s crash on the sector. As the firm claims, the process of tracking the addresses of BTC miners can be tricky, despite the transparency of the blockchain.
In order to get a clear picture of the current miners’ BTC holdings, Coin Metrics has labeled the addresses that the mining pools have come into contact with. These miners combine their resources and split the rewards for the inclusion of a block in the blockchain.
Miners pool their resources because they have a higher chance of getting rewards. These pools interact with BTC addresses called coin metrics 0 hop miners and then split rewards into 1 hop addresses or miners.
As seen below, the firm was able to find that there are 2.9 million 1-hop miners, but this is the total number of addresses for each unit that has ever mined 1 BTC. This number has been declining since January 2021 when the region became more industrialized.
In that sense, active bitcoin miners interacted with a total of 34,000 mining pools in 2022. A much lower number than its all-time high, and with 2021 when these addresses stood at 92,000.
Bitcoin Miners Reduce Holdings, But Remain Bullish
A total of 1-hop BTC addresses have been dumping their bitcoins since July 2020. This metric is inversely correlated with the price of BTC. While the cryptocurrency rose, the BTC supply held by these addresses was trending downward.
These entities have sold at least 500,000 BTC from that period affected by price volatility to June 2022. As seen below, active miners are also reducing their supply, but have only sold 25,000 BTC.
Coin Metrics analyst Parker Merritt added the following to the recent findings:
While most miners prefer hodling, last week’s market turmoil threw many miners for a loop. With the wick below $18K, many companies became sellers forced to liquidate their BTC treasuries to mitigate the impact of the margin call.
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The chart above is bullish, which could translate into a new period of BTC accumulation from miners. Overall, low leverage in the crypto market can contribute to healthy price action.