Final Capitulation Fears Mount as Miners Send Record Amounts of Bitcoin to Exchanges


Key Insights:

  • Bitcoin miners sent a record 88,000 BTC to exchanges on Wednesday.

  • Mining profitability has slumped 80% since the November market peak.

  • A final capitulation could occur when miners offload these assets.

Bitcoin miners are an essential function of the network, but they also have a substantial influence over market movements. BTC prices have slumped a whopping 25% over the past seven days, and the pain may not be over yet.

On-chain metrics have revealed that Bitcoin miners have been sending more of the asset to exchanges, with a new all-time high of 88,000 BTC sent on June 15, according to CoinMetrics.

The analytics platform also noted an all-time high in dollar terms with a net $1.94 billion worth of BTC sent to exchanges yesterday.

On-chain data provider Glassnode confirmed the findings reporting that the seven-day moving average of miners to exchange flow just reached a seven-month high of 9.47 BTC.

Bearish Bitcoin Movements

When miners move large amounts of Bitcoin to centralized exchanges, it is usually a sign that they are preparing to liquidate. Exchange inflows mean BTC is being transferred to a place where it can be quickly converted into stablecoins or fiat.

Rising energy costs worldwide will also have a major impact on mining revenue, so they may be attempting to offset some of those expenses by selling the asset.

Bitcoin mining profitability has tanked to its lowest level since October 2020, according to Bitinfocharts. Since the crypto market peak in November 2021, the metric has fallen by 80%, from 0.45 USD per day per terahash per second to under USD 0.10/day per TH/s.

Consequently, mining revenue has fallen to its lowest level for a year. Daily revenue is currently around $22.5 million, down 70% from the $74.4 million they were earning in October 2021, according to Blockchain.com.

Bitcoin hash rate often referred to as the computing horsepower for the network, remains close to its all-time high, however, at 226 EH/s (exahashes per second). Mining difficulty is also near peak levels which have compounded those revenue and profitability woes.

Castle Island Ventures partner, Nic Carter, saw the bright side suggesting that it was a sign markets were near the bottom.

“Miner selling was a key catalyst I was looking for to signal the bottom, granted it’s not over, but it’s important that a lot of it apparently happened already,”

A Final Capitulation?

The concern is that this significant miner sell-off could cause a final capitulation event dumping crypto asset prices even further. BTC has regained the $22,500 price level during Thursday morning’s Asian trading session, but a big miner offload is likely to send it crashing below $20K quickly.

Bitcoin is currently 67% down from its all-time high, so there is likely to be more pain before the bears are finished since previous market cycles saw drawdowns of more than 80%.

This article was originally posted on FX Empire

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