On-chain data shows that the volume of Bitcoin miners has seen a sharp decline recently. Here’s what this could mean for the asset.
The share of Bitcoin miners has declined sharply recently
In new mail On X, market intelligence platform IntoTheBlock discussed the recent trend in Bitcoin miner participation volume. “Miner Volume Share” here refers to an on-chain indicator that tracks the percentage of total Bitcoin transaction volume (i.e. the amount of BTC that participates in transfers on the network) that mining-related transfers account for.
Below is the chart shared by the analytics company that shows the trend in Bitcoin miner participation volume over the past decade.
The value of the metric appears to have been following a steep downward trajectory in recent weeks | Source: IntoTheBlock on X
As shown in the chart, the share of Bitcoin miners briefly rose beyond the 20% mark last year when BTC noted its rise in the first quarter. This suggests that miners were moving large sums around on the blockchain, perhaps to take advantage of the profit-making opportunity that the operation provided.
But since this peak, the value of the index has declined. There was a temporary deviation at the end of last year when BTC saw a new bullish high, again suggesting that miners were looking to capitalize. A sell-off that lasts only briefly may indicate that you have run out of coins to sell. However, another possible explanation for this trend could be that it was the increase in activity across the network that forced miners’ participation volume to shrink.
From the chart, it is clear that this pattern has been observed in previous bull markets as well, adding credence to the fact that it may be the higher transaction volume resulting from new capital inflows that tend to occur in such periods that is responsible for this trend.
It is also clear that the peak of the scale decreases with each cycle. This may be because the block support, which miners receive as compensation for solving blocks and makes up the bulk of their income, is halved every cycle during an event known as a halving.
Miners earning money naturally means they also have less capital to move around on the network, which will show in their share of transaction volume.
Bitcoin miners’ stake size has now fallen below 5%, meaning it has fallen below the bottom of the 2017 cycle. Despite this, it still has not yet reached the same low as it was during the 2021 bull market.
Bitcoin price
Bitcoin extended its losses by another 2% in the past day as its price fell to the $93,700 level.
Looks like the price of the coin has been going down over the last few days | Source: BTCUSDT on TradingView
Featured image by Dall-E, IntoTheBlock.com, chart from TradingView.com
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