Selling bitcoin is a way for companies to shore up their balance sheets.
Recently, CryptoQuant, a crypto analytics firm, said miners were quickly dumping their bitcoin holdings. In just 24 hours over the weekend, miners dumped a total of 14,000 bitcoins, worth more than $300 million at current prices.
In the past few weeks, the number of bitcoin sales has reached its highest level since January 2021, a phenomenon known as "miner capitulation" that typically indicates miners are preparing to sell their cryptocurrency savings to keep paying for mining. Bitcoin is currently trading at about $21,600, up about 3% in the past day. Still, the crypto market has been in the doldrums for months, with Bitcoin down nearly 70 percent from its all-time high of around $69,000 in November 2021.
Lower bitcoin prices and higher energy costs are sharply squeezing miners' profit margins, which is one reason crypto selling has accelerated in an attempt to contain the risk of continued volatility in the sector.
Joseph Ayoub, an analyst at Citigroup, shares similar thoughts in his notes. He realized that for some miners, the cost of mining could exceed the price of Bitcoin, so it was unwise to continue mining.
Mike Levitt, CEO of crypto mining company Core Scientific, also confirmed that crypto miners also have bills to pay. The company sold more than 7,000 bitcoins at an average price of $23,000.
According to Levitt, despite the profitability, expenses have been significantly reduced. Levitt noted that it will use the money from its Bitcoin sales to buy ASIC services, design data centers, pay off debt and settle employee grants.
As prices fall, Less efficient miners will be weeding out and global competition for hash rates and bitcoin production will diminish, Levitt explained. The hash rate dropped 15% last month. For large miners who can afford to weather the recession, this is a boon, as the drop in the global hash rate increases the productivity of bitcoin mining machines, with the cost of mining falling for each bitcoin produced.
For the future trend of Bitcoin, some analysts said that recently, cryptocurrency has gained a strong rebound, this round of continuous breakthrough rise has injected great confidence into the market, market sentiment index has thus obtained a large increase, panic has been significantly reduced, market confidence is further recovering.
BitMEX founder Arthur Hayes also said recently that he expects bitcoin to bottom out and rebound quickly as he predicts the Federal Reserve will pump trillions of dollars into the financial system again.