Bitcoin’s price has slightly recovered over the weekend and is now at a seasonal low of $27,360. Crypto market analysis firm CryptoQuant suggests that miners may be behind the slump in price.
Miners ‘Unload Their Bags’
BaroVirtual, an analyst, noted that miners have been reducing their holdings since May 5, with miner net position change turning negative on May 9. The metric gauges how much miner reserves are growing – or shrinking – each day, helping to measure whether miners are holding or selling their newly mined coins.
Miners were heavily accumulating Bitcoin from mid-March to mid-April, after which a wave of sell pressure helped push the asset down from over $30,000 to below $27,300 within three days. This selling pressure has remained relatively consistent until today, causing Bitcoin to fall to a multi-month low of $26,260 on Friday.
The BRC-20 Fee Spike
Before Bitcoin’s dip last week, miners were experiencing an increase in new revenue from the hype around Ordinals and BRC-20 tokens, which are bringing Ethereum-like utility (NFTs and tokenization) to Bitcoin. This phenomenon drove up Bitcoin’s fees much like Ethereum’s, reaching an average of $30 per transaction on May 8. These fees went straight into miners’ pockets, providing a massive bonus on top of the 6.25 BTC they typically earn per block. Miners’ net position briefly went positive during the BRC-20 hype days but has quickly returned to negative since fees dropped to normal levels. Fortunately for bulls, CryptoQuant suggests that the selloff will end soon.
“Currently, the miner net position values are in the zone where Bitcoin bounced off in previous times, and the local uptrend continued,” explained BaroVirtual. “In this regard, it can be assumed that miners can significantly reduce their pressure, i.e., slow down sales or cancel sales when Bitcoin hits the $24,000 target.”
CryptoQuant analysts told CryptoPotato last month that Bitcoin’s value could return to its previous all-time high of $69,000 by early next year, as institutions buy-in during late 2023.