Bitcoin Miners Enter $5.2B Sell-Off as BTC Hash Rate Hits All-Time High

Bitcoin Price Analysis:

Bitcoin price crossed the $58,500 mark on Thursday, Sept 12, up 11.5% within the weekly timeframe. Recent mining data trends suggest BTC could be at risk of a $2 billion Sell-off in the week ahead.

Bitcoin Price Rejects $60k as Mining Difficulty Hits New High

On Sept 11, as expectations of US Fed rate cuts grow, Bitcoin’s mining difficulty reached a new all-time high of 92.9t as miners around the world fired up their engines in anticipation of a major BTC price rally in Q4.

According to data culled from IntoTheBlock, this difficulty spike coincided with cooling inflation in the US CPI report published on Wednesday, which further raised expectations of Fed Rate cuts in the next FOMC meeting slated for Sept 17/18.

The spike in mining difficulty did not come as a shock to eagle-eyed strategic investors as the Bitcoin’s hash rate, which measures the total computing power supporting the network, had also hit an all-time high of 747.7 TH/s just few days earlier, on September 2.

Rising has rate suggests that a large number of miners have joined the network in recent week, in hopes of earning large profits, if US Fed rate cuts in Q4, propel BTC price to new heights as historically observed.

Notably, Bitcoin price performance has been largely positive since dovish US NFP and CPI reports released on Sept 6 and Sept 11 respectively, both raised investors’ hopes of an imminent US Fed rate cut.

Bitcoin price is currently trading at $57,633 level at the time of writing on Sept 12, having surged as high as $58,541. However, this shows that, while the likes of SUI and Toncoin (TON) have surged by more than 20% over the past week, BTC has been subdued to an 11.5% uptick.

Notably, Christopher Bendiksen, Bitcoin research lead at CoinShares, has warned that rising Hash rates means that unprofitable miners could be further crowded out by the new joiners, sparking bearish trading activity across board.

The combination of record-high difficulty and the recent halving is creating a “challenging” environment for many miners, especially those with higher operating costs. If current trends persist, some miners may struggle to remain cash flow positive, let alone profitable.

– Christopher Bendiksen, Bitcoin research lead at CoinShares

In affirmation of this stance a closer look at recent on-chain data trends shows an unusually high volume of BTC outflows from wallets linked to prominent crypto miner firms and mining pools.

Bitcoin Miners Have Sold 90,000 BTC Since August

According to Bendiksen, Miners appear to be “speculating on a significant increase in the Bitcoin price.” If it fails to materialize, there could be “trouble ahead for some operations.”

However, Bitcoin on-chain data trends over the past month signals early on-set of this Bendiksen’s bearish concerns.

Indicative of this, the Bitcoin miners reserves chart below monitors miners trading activity by tracking real-time changes in BTC balances held in wallets controlled by recognized bitcoin miners and mining pools.

As of July 30, Bitcoin miners held a cumulative balance of 1.98 million BTC. But the miners have since entered a prolonged selling frenzy cutting their balances to 1.89 million BTC price at the time of publication on Sept 12. This reflects that the Bitcoin miners have offloaded over 90,000 BTC from their reserves within the last 45 days alone.

Valued at the current prices, it means Bitcoin’s short-term market supply has been diluted by $5.2 billion worth of newly-mined BTC sold by miners during that period.

This partly explains why BTC has failed to break above the $60,000 resistance despite the bullish tailwinds from multiple dovish US macroeconomic indices published by US authorities over the past week.

Worryingly,  when such a large scale miner sell-off coincides with a spike in Hashrate, it suggests more bearish pressures ahead.

Without a dramatic increase in BTC prices, more miners could become unprofitable in the weeks ahead, and are likely to further add to the $5.2 billion sell-off observed between Aug 1 and Sept 12.

BTC Price Forecast: No Clear Bullish Conviction Without $62k Breakout

Bitcoin’s short-term market momentum remains bullish having surged 11.5% this week. However,  if all-time high Hash Rates recorded this week persists it could forces more miners to add to the ongoing $5.2 billion sell-offs.

Hence, the next BTC price rally could be considerably throttled, and further underperform relative to other altcoins, as observed with SUI and TON, this week.

In terms of short-term BTC price action, Donchian Channel (DC) indicator shows Bitcoin trading within a tight range, with the upper boundary at $64,998.01 and the lower boundary at $52,568.05.

The price has been hovering closer to the upper band, suggesting a possible test of the $58,783.03 resistance. Should the price fail to break this level, we could see a retracement toward the $52,568.05 support, especially if miner sell-offs intensify.

The Chande Momentum Oscillator (ChandeMO) is currently reading 3.69, indicating weak bullish momentum. While the indicator is in positive territory, suggesting the possibility of further upward movement, the strength of the rally is questionable.

The ongoing miner pressure could limit BTC’s ability to break past the critical resistance at $62,000, which is essential for any significant bullish conviction. The first critical resistance level stands at $58,783.03, with $62,000 as the next major barrier.

If Bitcoin can breach these levels, it may trigger a fresh wave of buying activity. Conversely, failure to hold $57,000 could push BTC toward the $52,568.05 support level, raising concerns of a further downtrend.

 

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