Bitcoin Sees Longest Miner Consolidation Period Since Trading Near $16K
While the effects of the fourth halving slowly set in, Bitcoin miners appear to be selling less and holding onto more BTC after the recent block reward reduction.
In fact, Bitcoin is currently seeing the longest-ever miner consolidation and accumulation period since it hit $16K.
BTC Miner Accumulation Continues
According to the latest analysis by CryptoQuant, the Miner Position Index (MPI) and Puell Multiple, which track miner selling activity and profitability, respectively, are indicating a significant reduction in miner sell pressure post-halving, with 14 consecutive days of consolidation and accumulation.
Simultaneously, miners are experiencing their lowest revenue levels in a year. This trend suggests that they are holding onto their BTC in anticipation of higher prices before selling.
As spot Bitcoin ETF flows increase and the likelihood of a rate cut in Q4 rises, miners are likely accumulating in preparation for a profitable sell-off in the coming months.
The halving slashed mining rewards from 6.25 BTC to 3.125 BTC. Initially, excitement around the event and the launch of Bitcoin Runes kept miners’ earnings up, but this changed in May as revenue dropped significantly.
Data compiled from Blockchain.com suggest that the total revenue from block rewards and fees hit a new low of $26.3 million on May 1. Before the halving, miners made around $6 million per day on average.
Prominent Bitcoin miner Hut 8 reported a 35% drop in proprietary production for April. Other public mining companies such as Bitfarms, Cipher, CleanSpark, Core Scientific, Riot, and Terawulf also witnessed production declines of between 6% and 12% for the same period.
Bitcoin Network Sees Surge in Usage
Meanwhile, CryptoQuant CEO Ki Young Ju highlighted a significant shift in miners’ income streams due to the development of applications on the Bitcoin network. As per the exec’s findings, transaction fees now contribute over 7% to miners’ total revenue, a stark increase from just 1% two years ago.
Building apps on #Bitcoin has significantly changed miners’ income streams.
Transaction fees now account for over 7% of their total revenue, up from 1% two years ago.
This trend has persisted for the last four weeks and could potentially strengthen the network’s fundamentals. pic.twitter.com/YVbdmLXB5c
— Ki Young Ju (@ki_young_ju) May 7, 2024
This change has been consistent over the past four weeks and therefore could potentially reinforce the network’s fundamentals. Additionally, on May 6, a total of 458,000 OP RETURN codes were used, suggesting a growing utilization of the Bitcoin network for purposes beyond basic transactions, essentially indicating a broader adoption.
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