Miner Sell-Offs and Derivative Contract Expirations Impact Bitcoin’s Price Movements
Bitcoin’s value continued to remain slightly below the $30,000 threshold on Wednesday, as miners sold off their holdings and derivative contracts expired, preventing a significant breakthrough in its price.
At 11:48 a.m. in New York, CoinGecko reported a 0.1% increase in the world’s largest cryptocurrency, bringing its value to $29,876.
Discussing the market situation, Youwei Yang, BTCM’s chief economist, informed The Block that some miners opted to sell their bitcoin due to recent increases in mining profit margins. Additionally, natural market corrections and the approaching expiration of derivatives contracts, around the $29K range toward month-end, likely contributed to the temporary dip.
CryptoQuant data analysis indicated a decline of approximately 5,000 coins in Bitcoin miner reserves since the start of June, suggesting a movement of funds to exchanges. This observation corresponds with Bitfinex’s recent market report, which highlighted a surge in miners depositing significant volumes of BTC into exchanges.
In light of these developments, the report stated, “We believe this activity indicates potential de-risking or hedging strategies adopted by miners, and it is notable that bitcoin mining stocks have soared recently as institutional interest in bitcoin rises.”
As we examine historical correlations, Yang emphasized that during crypto bull cycles, bitcoin tends to maintain its historic connections. However, during bear cycles, these correlations become less reliable. While bitcoin traditionally showcases an inverse relationship with the U.S. Dollar Index, its appreciation has been limited despite the recent 2.3% decline in the DXY.
Yang also predicted a bullish market to emerge around mid-2024, coinciding with the anticipated bitcoin halving in April 2024. This period aligns with the SEC’s evaluation of several spot bitcoin ETF approvals.
Furthermore, Yang speculated that the Federal Reserve might consider a rate cut in January or March, based on the CME FedWatch Tool’s rate change probabilities. However, he suggested that the Fed might postpone rate cuts until May 2024 due to persistent inflation, aligning with the expected start of a full-fledged bull cycle. This could encourage long-term investors to hold and accumulate Bitcoin from the present until then.
Disclaimer: The information provided in this post is for general informational purposes only and should not be considered professional or financial advice.