Why Bitcoin miners sprang into action prior to ETF approvals
- The number of Bitcoins transferred by miners to exchanges hit a 5-month high a day before the approvals.
- Hashprice fell considerably as Bitcoin prices dropped.
Bitcoin [BTC] sharply corrected two days after the spot ETFs were officially cleared for trading, falling as much as 7% from the levels seen immediately after the approval.
Over the weekend, the king coin meandered in the $42,000 region, according to CoinMarketCap.
Much of the downside pressure was sparked by outflows of Bitcoin from the Grayscale Bitcoin Trust (GBTC).
Note that the fund was converted into a spot ETF, allowing for the redemption of Bitcoins, which were locked up indefinitely in the previous structure.
However, one cohort of Bitcoin holders, perhaps, saw this pullback coming and accordingly executed their strategies.
Did miners see the pullback coming?
According to on-chain analytics firm IntoTheBlock, Bitcoin miners’ share of on-chain trading volume spiked drastically in the days leading to the ETF approvals.
In fact, the on-chain volume was the highest in more than four years.
Source: IntoTheBlock
Miners to exchange flow spiked
To cross-verify this data, AMBCrypto turned to another popular on-chain analytics tool, CryptoQuant.
Indeed, the number of Bitcoins transferred by miners to exchanges hit a 5-month high on the 10th of January, a day before the approvals. Moreover, the Miner to Exchange Flow was on an uptrend beginning the 7th of June.
Source: CryptoQuant
Was it a wise decision?
Miners, as we all know, frequently liquidate their holdings to cover costs incurred in setting up mining infrastructure. There are higher chances of these events happening when BTC is rising and offering better returns to the miners.
Take note that BTC gained significant bullish momentum before the approvals, pumping up to 60% in the previous three months.
Miners may have therefore seen the retracement coming and decided to lock in gains before it was too late.
Hashprice, considered an important barometer of miners’ profitability, fell considerably as Bitcoin prices dropped, AMBCrypto noticed using the HashRate Index data.
Read Bitcoin’s [BTC] Price Prediction 2023-24
Hence, in retrospect, the miners’ choice to liquidate appeared to be well-thought-out.
Source: Hashrate Index
Due to Bitcoin’s bull rally, miners’ earnings have lifted to levels not seen since the peak bull market of 2021. After a prolonged and punishing bear market, miners couldn’t have hoped for anything better.
Source: CryptoQuant
