Bitcoin is still down 10% over the past week. The No. 1 cryptocurrency by market capitalization has been consolidating current levels to a multi-year low of $17,500 after a massive crash.
At the time of writing, BTC is trading at $20,400, having traded sideways over the past 24 hours.
As reported by many outlets, Bitcoin miners have been reducing their Bitcoin holdings. This has resulted in selling pressure and the price of BTC plummeting from the $30,000 region to current levels.
recent Report Analytics firm Coin Metrics surveyed BTC miners’ addresses, where money was flowing, to determine the actual impact of the Bitcoin crash on the industry. As the company claims, despite the transparency of the blockchain, the process of tracking down BTC miner addresses can be difficult.
To get a clear picture of current miners’ BTC holdings, Coin Metrics flagged addresses that were in contact with mining pools. These miners combine their resources and include a block in the blockchain to distribute rewards.
Miners pool their resources because they have a greater chance of being rewarded. These pools interact with BTC addresses that Coin Metrics calls 0 Hop miners, and then distribute rewards to 1 Hop addresses or miners.
As you can see below, the company was able to discover that there are 2.9 million 1-hop miners, but this is the total number of addresses per entity that ever mined 1 BTC. That number has been falling since January 2021, when the industry became more industrialized.
In this sense, the total number of active Bitcoin miner addresses interacting with mining pools in 2022 is 34,000. That number is much smaller than the all-time high, with 92,000 of these addresses in 2021.
Bitcoin miners underweight, but still bullish
The total number of one-hop BTC addresses has been dumping their bitcoins since July 2020. This indicator is inversely proportional to the price of BTC. While the cryptocurrency has risen, the supply of BTC held by these addresses has trended downward.
Between this time and June 2022, these entities have sold at least 500,000 BTC due to price volatility. As you can see below, active miners have also been reducing supply, but only sold around 25,000 BTC.
Coin Metrics analyst Parker Merritt added the following to recent findings:
While most miners prefer HODLing, last week’s market turmoil has left many miners in limbo. As the wick fell below $18,000, several companies were forced to sell, liquidating their BTC treasuries to minimize the impact of margin calls.
The chart above is up, which could translate into a new period of miners accumulating BTC. Overall, lower leverage in the crypto market may contribute to healthier price action.