FameEX Hot Topics | Bitcoin Miner OTC Balances Reach 2-Year High — Why This Could Indicate a Bearish Trend

Cryptocurrency miners currently hold the largest amount of Bitcoin ready for sale in over two years, signaling potential downward pressure on prices. A CryptoQuant report from August 21 notes that historically, an increase in balances at Bitcoin over-the-counter (OTC) desks correlates with price declines.

The last three months saw a significant 70% increase in OTC desk balances, culminating in 368,000 Bitcoin, valued at approximately $22.36 billion. This marks the highest level since June 2022 and indicates robust selling activity among miners.

Historical data underscores the impact of such increases on market prices. For instance, in May 2018, when OTC balances soared above 400,000 BTC, the price of Bitcoin stood at $8,475. By December of that year, it had dropped 63% to $3,183. A similar pattern emerged in November 2021; Bitcoin prices dropped by 45% two months after OTC balances reached a peak near 500,000 BTC, with prices falling from around $64,000 to $35,058 by January 2022.

Miners prefer OTC transactions to optimize execution and minimize their impact on market prices, as these platforms typically provide higher liquidity than public exchanges. Despite these pressures, recent trends in the market might mitigate some of the potential for price declines. A notable decrease in Bitcoin's availability on exchanges, coupled with substantial acquisitions by Bitcoin whales—totaling 94,700 coins in the past six weeks—could provide some price support.

However, miners are navigating a challenging economic landscape. The April Bitcoin halving has led to increased operational costs and reduced rewards, making mining unprofitable for many. According to data from MacroMicro and CoinMarketCap, the average cost of mining one Bitcoin is currently $72,224, whereas the market price hovers around $60,797.

Bitcoin commentator Colin Harper observed in an August 22 post that despite a decrease in earnings in Q2 compared to Q1, some miners have effectively mitigated revenue losses by expanding their hashrate and upgrading to more efficient mining equipment. These strategic adjustments are essential for miners trying to cope with fluctuating market conditions and maintaining profitability.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.