Bitcoin sees selling pressure from miners and long-term holders amid drop to $64,000: Bitfinex

Last week marked a remarkable change in the dynamics of the crypto market. Bitcoin (BTC) lost more than 6% of its value, and local US Bitcoin exchange-traded funds (ETFs) broke their 20-day inflow streak with outflows of hundreds of millions of dollars.

According to the latest Bitfinex Alpha report, the fall in bitcoin was mainly caused by the selling of long-term holders, whales and miners on exchanges and through over-the-counter transactions.

Pressure selling of LTH and whales

Long-term holders tend to sell their holdings gradually during bull cycles, especially when the market is consolidating, which is the current phase. This cohort of investors was responsible for most of the selling pressure last week, far outpacing cash ETFs.

The Hodler Net Position Change metric, which tracks the monthly position changes of long-term bitcoin investors, indicates the intensity of selling pressure. When long-term holders are selling, this metric turns negative, and when they are buying, it turns positive. The indicator has been consistently negative for the past nine days.

In addition to the long-term starters, the Whalers have also been busy. The share of the top ten inflows to exchanges as a proportion of total inflows has increased, indicating that a large amount of BTC is being deposited into trading platforms via whale wallets, likely in preparation for selling .

Although the crypto market sell-off is on a smaller scale than previously seen in April, Bitfinex analysts said it highlights the influence of long-term holders on BTC market dynamics. It also serves as a reminder that long-term holders and whales remain collectively the largest cohort of bitcoin holders, outperforming spot ETFs. The decisions of these investors can affect liquidity and price movements during critical market phases.

Exhausted mining reserves

Additionally, miners’ BTC reserves fell sharply last week after a steady decline since before the Bitcoin halving.

“BTC’s peak around March 2024 corresponds with a significant decrease in miner reserves, suggesting that miners were selling their reserves to capitalize on high prices. This was common at the time, as miners they were also selling reserves to prepare for the Bitcoin halving to make the necessary investment to upgrade machinery and operations,” Bitfinex said.

Analysts assume that miners are still struggling to maintain operational efficiency as their block rewards have been reduced. They are contributing to the current trade pressure and their reserves have fallen to four-year lows.

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