BTC held by miners hits new 10-year low
Bitcoin, the pioneering cryptocurrency, is characterized by a unique feature designed to control its supply and ensure scarcity – the Bitcoin halving. This event, which occurs approximately every four years, plays a pivotal role in the cryptocurrency's economic model.
What is Bitcoin Halving?
Bitcoin halving is a programmed event that reduces the rate at which new bitcoins are generated, ultimately limiting the total supply. The Bitcoin network was designed by its pseudonymous creator, Satoshi Nakamoto, to have a maximum supply of 21 million coins. To achieve this, Nakamoto introduced the concept of halving approximately every 210,000 blocks, or roughly every four years.
Why Does It Happen?
The primary objective of Bitcoin halving is to mimic the scarcity and deflationary characteristics of precious metals like gold. By reducing the reward that miners receive for validating transactions and securing the network, Bitcoin seeks to emulate the gradual reduction in the production of precious metals over time.
In practical terms, when Bitcoin was first launched in 2009, miners received 50 bitcoins as a reward for every block they successfully mined. The first halving occurred in 2012, reducing this reward to 25 bitcoins. The second halving occurred in 2016, bringing the reward down to 12.5 bitcoins. The most recent halving took place in May 2020, further reducing the reward to 6.25 bitcoins.
Impacts on Supply and Demand Dynamics
Bitcoin halving events have profound effects on the cryptocurrency's supply and demand dynamics. The reduction in the rate of new Bitcoin issuance directly affects the available supply, making it scarcer. If demand remains constant or increases, basic economic principles suggest that a decrease in supply can lead to an increase in price.
Historically, Bitcoin has experienced significant price rallies in the months and years following halving events. However, it's essential to note that past performance is not indicative of future results, and the cryptocurrency market is influenced by various factors.
Market Sentiment and Investor Expectations
Leading up to a halving event, speculation and anticipation often drive market sentiment. Traders and investors closely monitor the countdown to the halving, considering historical patterns and the potential impact on bitcoin's price. While the halving is a predetermined and transparent aspect of Bitcoin's protocol, its influence on market dynamics is subject to a multitude of factors, including macroeconomic trends, regulatory developments, and technological advancements.
In the following table made by BELOBABA, we can see the dates of the halvings and block rewards, past dates and the next two. Includes the block number and the new bitcoins issued.
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Amount of BTC held by miners hits new 10-year low…
Additionally, we have to take into account that the price does not rise in a straight line and that miners have a strong influence on the price of bitcoin.
At this time, in the first half of January 2024 and months away from the new halving, miners have very few bitcoins in their possession, which means that in recent months, they have heavily sold their reserves.
In the long term, bitcoin should rise a lot, it seems, but perhaps now the price could encounter difficulties in the short term, which would allow miners to no longer sell and accumulate again, so that when the price rises again, they can sell. , much higher.
Of course it is not an exact science, but we must pay attention to these circumstances, these fundamental onchain analyses, since they usually have their importance.
Even though they have sold, their long-term/average profits go down. The reason is that although bitcoin is priced higher, mining equipment costs more and more and, furthermore, there is less and less bitcoin.
In the previous graph I show this situation. Onchain analysis of Puell Multiple.
Total Fee Revenue And Average Rates
Key on-chain analysis metrics include exchange reserves, transaction volume, and indicators like the Pi Cycle Top.
On-chain analysis benefits traders by offering trading signals, market timing insights, and risk management strategies.
I added the onchain analysis on the Total Fee Revenue And Average Rates of the bitcoin miners, to have an updated x-ray of the situation.
And finally, an excel table of all the bitcoins to be mined and when they will be mined, both the past and the future ones and all the blocks, reward blocks, in which BTC is changed from the average halving and also the percentage of the limit of bitcoin, so that we have a complete picture of what is to come.
Remember to do your own research or consult with your trusted financial advisor before investing in crypto assets.