The recent drop in the price of Bitcoin below $40,000 can be partially attributed to miners selling their reserves, according to an analysis by Bitfinex. The approval of new ETFs on Bitcoin spot in the USA initially caused the price to rise to $49,000, but it has since stabilized around $43,000. However, starting from January 18th, there has been a descent that brought the price below $42,000 and even below $39,000 on the 23rd of the same month.
Bitfinex’s report suggests that miners took advantage of the previous price increase to exit or exploit previously acquired positions. They are inclined to sell in anticipation of the upcoming halving of their reward, which will reduce mining profitability. The recent decrease in miners’ BTC reserves and outflows from their wallets indicate that there could be more sales in the future.
Miners face a problem as the Bitcoin network will reduce the average daily distribution of BTC rewards from about 900 to 450. To solve this problem, they may turn off older and less efficient mining machines and replace them with more efficient ones. They are selling part of their accumulated BTC to fund these purchases.
Despite these challenges, Bitfinex’s report remains optimistic overall. It notes that long-term holders have remained inactive and there have been significant movements of BTC from more recent owners, which historically precede potential peaks. The market and traditional markets show resilience, indicating a positive sentiment.
In conclusion, while the drop in Bitcoin’s price can be attributed to miners selling their reserves, there are still positive indicators for the cryptocurrency’s future.
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