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Bitcoin Miners Contributing To BTC Crash? New Report Sheds Light

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Bitcoin remains in the red with a 10% loss over the last week. The number one cryptocurrency by market capitalization is consolidating at its current levels after a massive crash and to a multi-year low of $17,500.

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At the time of writing, BTC price is trading at $20,400 with a sideways move in the last 24 hours.

BTC is moving sideways on the 4-hour chart. Source: BTCUSD Trading Review
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As reported by many media outlets, Bitcoin miners are reducing their holdings of BTC. This contributed to selling pressure and the price of BTC falling to current levels from $30,000.

Recent report analytics firm Coin Metrics has studied BTC miner addresses and fund flows to determine the real impact of the Bitcoin crash on the sector. According to the firm, the process of tracking BTC miner addresses can be difficult, despite the transparency of the blockchain.

To get a clear picture of miners’ current holdings of BTC, Coin Metrics flagged addresses that came into contact with mining pools. These miners pooled their resources and shared the reward for including the block on the blockchain.

Miners pool their resources because they are more likely to be rewarded. These pools interact with BTC addresses, which Coin Metrics calls 0 Hop miners, and then the shared rewards go to the 1 Hop address or miners.

As seen below, the firm was able to discover that there are 2.9 million single jump miners, but this is the total number of addresses for every organization that has ever mined 1 BTC. This number has been declining since January 2021 when the sector became more industrialized.

Bitcoin BTC BTCUSD miner CM
Source: CoinMetrics

In this sense, the number of active addresses of bitcoin miners interacting with mining pools in 2022 was 34,000. This is a much lower number compared to its all-time high and from 2021, when these addresses were 92,000.

Bitcoin miners are cutting assets but remain optimistic

The total number of BTC addresses with 1 hop has been resetting their bitcoins since July 2020. This indicator is inversely correlated with the price of BTC. While the cryptocurrency has been rising, the supply of BTC held by these addresses has been on a downward trend.

These entities sold at least 500,000 BTC from this period until June 2022, which were affected by price volatility. As seen below, active miners are also cutting back on their supply but have only sold around 25,000 BTC.

Source: CoinMetrics

Coin Metrics analyst Parker Merritt added the following to the recent findings:

While most miners prefer HODL, the market turbulence last week has left many miners stumped. As the wick dropped below $18K, several companies became forced sellers, liquidating their BTC Treasuries to minimize the impact of the margin call.

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There is a surge in the chart above that could lead to a new period of BTC accumulation by miners. In general, less leverage in the cryptocurrency market can contribute to healthier price action.

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