Miners have sold less Bitcoin (BTC) in the past seven days as the long-awaited reduction in block-block rewards approaches. This means that miners expect Bitcoin’s price to increase significantly over time after halving.
Bitcoin’s halving, scheduled for Tuesday, occurs approximately every four years. When this option is enabled, the number of Bitcoin miners that are rewarded for their problems will decrease. As the newly generated bitcoins are brought to market by the miners who sell them, halving is expected to reduce the rate of introduction of these new bitcoins.
Given the deflationary nature of Bitcoin Any event that affects your offer has a significant impact on the price of the asset. In the medium and long term, the data show that miners are confident that halving the price will significantly increase the price.
Hoarding Bitcoin by miners is usually a bad sign
In the past week, miners had around 1,067 Bitcoin, according to ByteTree data. Apparently, miners’ hoarding of Bitcoin seems positive, but it isn’t.
Bitcoin miners, especially large centers, perform sophisticated operations with professional traders and market analysts. They often assess liquidity and general market sentiment. If miners consider liquidity in the cryptocurrency market to be low, they will not sell.
If there is not enough buying demand in the market, selling a significant amount of Bitcoin can lead to a sudden drop in price with high slip. The term slippage is used to describe a movement in the price of an asset when a large buy or sell order is executed.
As a rule, miners who do not sell most of the bitcoin they mine to cover the costs are not optimistic. However, the ByteTree research paper found that miners can expect the next cut in half this time to significantly increase the price of Bitcoin. Charlie Morris, co-founder and president of the company, wrote:
“”We usually see this as bearish as it implies a weak supply in the market. This was clearly not the case with the recent price increase, and so we can only assume that miners will also assume that prices will rise after halving.“”
Miners are likely Expect a big bitcoin rally due to rising mining costs after halving. In 2018, the average cost of mining a Bitcoin in the U.S. was estimated at $ 4,758. In countries with lower electricity tariffs and naturally cold climates, such as the mountainous regions of China, mining costs were around USD 3,200. Earlier this year, research firm TradeBlock said the cost of mining a single bitcoin was estimated at $ 6,851. thats why As long as Bitcoin’s price stayed above $ 7,000, miners would be profitable.
The fact that Bitcoin’s price stayed above $ 6,000 or $ 7,000 before halving on Tuesday was critical for the same reason. If Bitcoin hadn’t recovered to $ 8,000 to $ 9,000, it could have put pressure on small, over-funded miners to temporarily close their deals.. After halving, the cost of Bitcoin mining is estimated at $ 12,000 to $ 15,000, according to the same TradeBlock blog post. thats why Given that Bitcoin’s operating costs will exceed $ 12,000, miners should expect Bitcoin’s price to return between $ 12,000 and $ 15,000 in the medium term.
Miners have avoided catastrophic halving
Currently, just four days to halve, sentiment regarding Bitcoin and the entire cryptocurrency market in the mining community remains positive. But the state of the mining industry could have been in worse shape than it is now if the price of Bitcoin hadn’t recovered quickly. On March 12, less than two months before the cut in half, the price of Bitcoin dropped to around $ 3,600.
At the time, there were theories that the price of Bitcoin should never drop below $ 5,000. A cascade of long liquidations, mainly on BitMEX, caused prices to skyrocket. Since Bitcoin has completed a V-shaped recovery with a rally of 150%. There was concern that insufficient liquidity and the general feeling of caution in the stock markets would trigger a sharp correction in the cryptocurrency market.
Strong spot volume on major exchanges such as Coinbase and Binance showed actual retail demand. The likelihood of a withdrawal like Black Thursday has been increasingly reduced as the price of Bitcoin increased with volume.
Both deribit options and CME futures had record trading activity on Wednesday, and CME had record-free interest in their futures contracts. As of Thursday, Bitcoin’s price was $ 9,500, 40% higher than Bitcoin’s mining cost before halving. If Bitcoin had stayed at $ 6,000 or less at the time of the halving, the miners would have been forced to trade at a loss, which would have put many miners in a financially unstable position later.
Now, with bitcoin above $ 9,000, China’s top miners can negotiate lower electricity prices to mine bitcoin at equilibrium prices, possibly even after halving it. The rainy season begins in the Chinese province of Sichuan, where many of the most important mining centers are located. Since many power plants in Sichuan are operated with hydropower, the region often has a surplus of electricity.
Cheaper electricity, higher Bitcoin prices and strong buyout demand from private investors put the miners in a strong position to cut in half and later anticipate cutbacks in sales.
Earlier halving led to bullish phases
After halving November 2012, the price of Bitcoin is increased 6.940% from $ 10 to $ 704 over a period of four years until the next halving activation in July 2016. From July 2016 until now, when we go to halving May, The price of Bitcoin has risen by 1,249% and has increased more than tenfold.
Building on Bitcoin’s historic performance and the famous stock-to-flow relationship created by PlanB, Dan Morehead, CEO of Pantera Capital, he said that the price of Bitcoin could reach $ 115,000 in mid-2021.
Crypto trader Satoshi Flipper said that Bitcoin’s price is technically approaching a significant level of resistance of several years. Although traders remain divided over whether Bitcoin will find its way on the first try, investors expect Bitcoin to continue its upward trend in the medium term. The dealer he said::
“”Simultaneously with the next halving of $ BTC, we are approaching resistance from the upper trend line. I’m looking forward to a huge firework display and the bursting of this massive 2-year-old symmetrical triangle. We have touched this resistance several times“”
One possible reason why the price of Bitcoin tends to rise significantly after halving is as follows The selling pressure on the market is reduced. Miners generate 50% less Bitcoin, which is half of the usual offering sold on the market.
Historically The Bitcoin price has seen significant increases in the 10 or 11 months after halving, which keeps miners from selling Bitcoin as soon as it appears. Alejandro De La Torre, the vice president of the Poolin mining pool, wrote in a blog post:
“There is little doubt among researchers and industry experts that if the block’s subsidy is halved, the hash rate will drop significantly. Blockware Solutions recently published a report that argues that the cut to half will do the job Reduce sales pressure as older devices and higher electricity costs put inefficient competitors under pressure. “
Bitcoin miners are generally better positioned than previous halves due to professional custody solutions, mining-specific service providers and increased liquidity in the spot and over-the-counter markets. The halving is expected to take place in mid-May represents a positive precedent for long-term price developments over the next four yearsespecially when Bitcoin is approaching its fixed offer of $ 21 million.