The two reasons why Bitcoin’s price is taking a beating: bit by bit

The price of Bitcoin fell sharply earlier this week, generating more than $300 million in crypto market liquidations in a single day. Why the sudden volatility?

Gayatri Choudhury, quantitative research analyst at Bitwise, says there have been two key drivers of the sell-off, and neither relates to Bitcoin ETFs.

Miners are pouring

The analyst first noted on Tuesday that the activity of Bitcoin miners, a cohort “often overlooked” by market watchers. Since the fourth Bitcoin halving in April, miners on the network have been steadily selling their BTC amid much lower earnings and historically high competition from global competitors.

“On June 9, more than 3000 BTC were transferred from mining pools to Binance, marking a two-month peak,” Choudhury said. Citing a CryptoQuant dashboard, the analyst noted that such strong selling tends to correlate with bearish price action, such as in mid-April directly after the pullback in middle or end of May.

CryptoQuant published a report earlier this month that addressed the aggressive minder selling, largely crediting it to Marathon Digital (MARA), the largest publicly traded miner. The company unloaded 1400 BTC at that time throughout June, representing 8% of its total BTC holdings.

Both Bitwise and CryptoQuant also noted that miners sold 1200 BTC via OTC tables on June 10, their highest daily volume since March. As for regular exchanges, Choudry said that more than $4.5 billion in assets moved from miners’ balances to exchanges in June.

As for the motivations for his sales, Choudry highlighted miners’ tight profit margins since the halving. “The average miner’s revenue per terahash of energy invested in securing the network has dropped by 56% since the halving,” he said.

Mt. Gox Fears

Adding to the market’s concerns was an announcement Monday from Mt. Gox confirming that it would finally return customers their ten-year-lost Bitcoin after a ten-year hiatus. The exchange has more than 141,000 BTC worth more than $8.5 billion, spooking investors as they expect a sudden wave of BTC selling pressure.

“The situation may seem difficult right now, but remember that just a year ago Bitcoin was trading at $30,000. A year before that? $10,000,” Choudhury concluded.

Although the bearish effect of selling pressure from Mt. Gox has yet to be seen, crypto investors are currently awaiting the launch of Ethereum ETFs in the United States in the same month. Analysts at K33 Research believe the ETFs will fetch $4 billion in their first five months on the market.

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