Bitcoin Miners' Pre-Halving Sales and US Spot ETFs Prevented Steep Price Drop: Bitfinex
Summary:
Before the Bitcoin halving, miners sold a significant part of their holdings, which helped prevent a steep price plunge, said Bitfinex. Post-halving, Bitcoin's value climbed 4.5% and miners normally see revenue fall, with rewards dropping to about $208,000 at current prices. Despite this, increased prices and mining growth often follow to offset any negative impact. Bitfinex also suggested institutional demand for US spot Bitcoin ETFs may have alleviated the adverse price impact of the halving, with ETF flows maintaining strong interest despite occasional net outflows and a predicted tightening of Bitcoin supply.
Prior to the halving, BTC miners chose to sell a large part of their reserves. US-based spot exchange-traded funds (ETFs) may have helped mitigate potential selling pressure, thus preventing a steep price decrease coinciding with this event, according to Bitfinex. The company stated in its weekly market report from April 22 that miners' preemptive selling proved beneficial for the market in the near term. Data from CryptoQuant revealed that miners sent an average of 374 BTC to exchanges daily in March, marking a significant drop of over 70% from the February daily average of 1,300 BTC, equivalent to $86.4 million. Bitfinex suggested that miners were either liquidating their BTC holdings or using them as collateral for infrastructure and equipment improvement.
Cointelegraph Markets Pro data indicates that Bitcoin's value increased approximately 4.5% to $66,597 following the April 20 halving, maintaining an upward trend that began after dropping to a sub-$60,000 40-day low on April 17. Usually, miners face revenue decline post-halving events. This time around, their rewards were reduced to about 3.125 BTC per block mined, or approximately $208,000 at current market value. Bitfinex reports that in previous halvings, miners have exerted significant selling pressure to maximize profits before a 50% cut in their revenue stream, potentially triggering short-term volatility and price decreases. However, it noted that price increases and growth in mining operations usually happen afterwards to offset these reduced rewards, and that these negative effects often prove temporary.
Bitfinex suggests that institutional demand for newly launched US spot Bitcoin ETFs may have also helped mitigate the potential negative price impact triggered by the revised BTC reward structure. ETFs, it adds, can greatly influence pricing and market sentiment due to their large-scale flows, in this case reaching $192 million in outflows from Bitcoin investment products last week. Bitfinex further states that ETF flows, despite sometimes experiencing net outflows and having slowed since their January launch, still retain strong interest. The amount of Bitcoin bought by the ETF issuers for their funds has exceeded new BTC production since their launch, leading Bitfinex to predict that Bitcoin supply will significantly tighten. Depending on issuance trends, Bitfinex writes that a daily supply of Bitcoin as low as $30 million could emerge in the post-halving market, while average daily net ETF inflows could exceed this at over $150 million. The total ETF demand has exceeded supply by over 150,000 BTC so far, a trend Bitfinex anticipates will persist in the months ahead.
Published At
4/23/2024 8:49:10 AM
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