Bitcoin miners have been one of the key players causing market declines as they engaged in intense selling after the latest halving event which slashed the mining rewards from 6.25 to 3.125 BTC earlier this year.
However, the latest data suggest that the selling pressure from these entities has significantly decreased. Such a trend could potentially bolster the asset’s price and trigger a market-wide surge.
Weakening Miner Sell Pressure
The recent bearish market conditions have dampened the earlier optimism and enthusiasm surrounding bitcoin’s price, which could indicate a potential market bottom. Especially after halving on April 20th, miners began offloading their BTC as the reduced mining rewards rendered older mining equipment unprofitable, leading to decreased activity on their part.
However, CryptoQuant’s latest analysis stated that the market is currently absorbing this sell-off, as evidenced by the rapid decrease in the volume and number of bitcoins being moved out of miners’ wallets.
This decline in selling pressure suggests that the market might stabilize, and if the current sell-off volume is fully absorbed, it could pave the way for a renewed upward rally. Positive trends in the market are anticipated for the third quarter of 2024.
“In other words, the selling pressure of miners is weakening, and if all of their selling volume is absorbed, a situation may be created where the upward rally can continue again. Positive movements in the cryptocurrency market can be expected in the third quarter of 2024.”
AI and Bitcoin Mining
It has been two months since the Bitcoin halving event, following which the business of generating new BTC has faced a severe downturn in terms of profitability. Several operators are experiencing financial strain due to the recent block reward halving while some were actively looking for exit strategies.
As a result, an interesting trend gained prominence this year. Mergers, financings, and partnerships are quickly forming between AI and Bitcoin mining operations as the former sees more demand for capacity while the latter seeks new ways to maximize returns on their significant capital investments.
This week saw popular Bitcoin miner Core Scientific announcing an expanded partnership with CoreWeave, an Nvidia-backed startup and a leading provider of technology for running AI models. As part of the deal, Core Scientific will supply 70 megawatts of computing infrastructure to support CoreWeave’s operations.
Prior to this, another prominent name in the space – Hut 8 – revealed that it had secured $150 million in debt from private equity firm Coatue to aid in the development of its data center portfolio for AI.