Forced BTC Selling By Bitcoin Miners to Continue As Network Fees Collapse 90%

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As a seasoned crypto investor with a few years under my belt, I’ve seen my fair share of market ups and downs. And let me tell you, the latest report from Kaiko Research has got me feeling a bit uneasy.

As a researcher studying the Bitcoin market, I’ve come across intriguing insights from Kaiko Research’s latest report. The selling pressure from Bitcoin miners is expected to persist due to decreased rewards and lower network fees. Over the past two months post the Bitcoin halving event, these miners have been offloading their Bitcoins to meet their operational expenses.

Bitcoin Network Fees Tank By 90%

According to the Kaiko analysis, Bitcoin network fees have experienced a significant decrease of approximately 90% over the past six months. In contrast to the high of $45 in January 2024, the average fee now ranges between $3 and $5.

Following the Bitcoin halving, fees on the network spiked up to $150 temporarily due to the rush of NFT minting activities on the Bitcoin blockchain. This brief peak in fees offered a reprieve for Bitcoin miners before fees saw a substantial decrease once again.

The reward given to Bitcoin miners for verifying transactions has been reduced by half following a recent halving event, from 6.25 Bitcoins to 3.125 Bitcoins. Simultaneously, the expenses associated with mining have escalated due to heightened demand for computational power.

Simultaneously, the Bitcoin price exhibiting minimal change and displaying a pattern of sideways movement has worsened the situation. Additionally, there’s been a noticeable decrease in bullish sentiment among both retail investors and institutions. This is reflected in the substantial decline of investments into Bitcoin spot ETFs compared to the first quarter.

If the cost of Bitcoin (BTC) isn’t propped up by external factors, Bitcoin miners will be forced to offload more of their reserves.

Here’s How Bitcoin Miners Are Coping Up

As a researcher investigating the Bitcoin market, I came across a notable announcement from Marathon Digital, one of the largest Bitcoin miners. They disclosed selling 390 BTC during May, with intentions for further sales to secure their operations. If more miners follow suit, this could potentially exacerbate downward price pressure on Bitcoin. The immediate support level for Bitcoin is currently at $60,000. Should this level be breached, we may witness a decline in the Bitcoin price to $57,000 and then further down to $54,000.

In the face of decreasing profits from Bitcoin mining, companies such as Marathon Digital have turned to mining other proof-of-work cryptocurrencies, including Kaspa (KAS), as an alternative.

As a financial analyst, I anticipate that mining companies will merge due to financial strain in order to optimize their operations and boost profitability. This consolidation tendency is likely to carry on as the consequences of Bitcoin’s halving continue to shape the sector.

Riot Blockchain made a hostile bid for Bitfarms Ltd., adding to the trend of consolidation in the industry. Likewise, CleanSpark Inc. revealed plans for an all-stock deal worth $155 million to acquire Griid Infrastructure Inc.

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2024-07-02 17:31