Miners dumped over 16,000 ETH, worth greater than $20 Million, in the past week, on-chain data showed. The Ethereum (ETH) miners still have about 245,000 ETH left – and no longer any business affiliation with the blockchain tech network.
In the years and months leading up to the Ethereum (ETH) blockchain’s historic shift last week to a more energy-efficient system, data miners working for bonus on the network had accumulated nearly $341 Million worth of the digital currency ether (ETH).
Now, a week after the Merge, cryptocurrency analysts are warning that miners’ sales of their hoards could become a source of near-term, downward pressure on the cryptocurrency’s price, with the market already sinking by 19 percent in the past month.
“Miners dumping their ETH is an overhang that we’ll have to get through over the months ahead in order to resume up-only mode, but it will happen,” Lucas Campbell, editor of the Bankless newsletter, wrote Monday.
Blockchain Tech data assembled by OKLink appears to show miners starting to sell down their stashes in the previous week.
Ethereum (ETH) miners dumped over 16,000 ETH from Sept. 12 to Sept. 19. (The Merge took effect on Sept. 15.) The decline reduced the miners’ combined balance to about 245,000 ETH, or about $319 Million worth.
Lucas Outumuro, head of research at IntoTheBlock, attributed the decline in the balances to “miners moving onto other chains.”
They’re “taking profits from their ETH holdings,” he said.
It’s likewise possible that some miners may have sent some ether to exchanges to handle an “airdrop” of new crypto tokens from a splinter blockchain tech that aimed continuation on with the Ethereum (ETH) blockchain’s now-abandoned “proof-of-work” system, Outumuro stated. That effort has since mostly fizzled.
Ether’s price had soared in the weeks before the Merge, as some traders likewise jockeyed for the airdrop, while others speculated that the shift might lead to a surge in institutional investment. On the other hand, when the Merge essentially took place, the cryptocurrency’s price suddenly plunged – in what analysts termed a “buy-the-rumor, sell-the-fact” market reaction.
The sell-off likewise coincided with the runup to this week’s Federal Reserve’s meeting, which included a pledge to aggressive monetary policy that has put downward pressure on risky investment prices, from stocks to digital currencies.
“If miners had accumulated Ethereum (ETH) at a profit, or they needs to pay their electric bill, they would be incentivized to sell at a profit, especially with the expected and actual increased volatility,” stated Alexandre Lores, director of blockchain tech market research at Quantum Economics.
”For the 1st time, these miners have no future business relationship with Ethereum,” Lores said
It’s possible that miners’ move may have contributed to the immediate weakness in prices post-Merge, as reported by Jeff Dorman, chief financing officer of digital- investment management firm Arca. The ether price was trading around $1,300 Thursday.
It’s not a sure thing that all miners will liquidate their holdings, Dorman said.
“Maybe some [miners] will Becomes speculators and hold on for better price,” Dorman stated. “Maybe some will Becomes stakers and secure the new network, but that [mining] business is over.” The new network relies on “stakers” – investors who help to secure the blockchain tech by “staking” their ether – instead of the energy-intensive “proof-of-work” mining that Ethereum (ETH) previously used.
Ex- Ethereum (ETH) miners who choose continuation proof-of-work mining can shift to a different chain. Related altcoins’ prices have seen a significant increase, with Ravencoin (RVN) up 64 percent and Ethereum (ETH) Classic’s ETC crypto token gaining 75 percent in the past 90 days.
Chainalysis Economist Ethan McMahon stated he sees the miner selling as “a temporary shift” in moving away from Ethereum (ETH), “if miners’ initial reason for holding Ethereum (ETH) was for the store-of-value or financing purposes.”
Disclaimer: This page is simply meant to provide information. It does not constitute a direct offer to purchase or sell, a solicitation of an offer to buy or sell, or a suggestion or endorsement of any goods, services, or businesses. Lolacoin.org does not offer accounting, tax, or legal advice. When using or relying on any of the products, services, or content described in this article, neither the firm nor the author is liable, directly or indirectly, for any harm or loss that may result. Read more at Important Disclaimers and at Risk Disclaimers.