Bitcoin (BTC) could be seeing less selling pressure from miners in the near term due to an increase in the profitability of this cohort of market participants and the recovery of their hashrate following the cryptocurrency’s rally to the $69,000 range.
According to a CryptoQuant report, the Bitcoin network hashrate recovered while BTC had its latest rally. The metric’s drawdown from its all-time high is now 3%, compared to 8% on July 9.
Bitcoin Network Hashrate Recovers
On July 9, the Bitcoin hashrate plunged to its lowest level since February 28; however, at the time of writing, the rate had risen 6% to 604 EH/s. CryptoQuant analysts say a hashrate recovery is often associated with a sustained rally of bitcoin’s price.
Miners’ increased hashrate comes alongside their rising profitability. This cohort of market participants are now paid more than they have been since the Bitcoin halving in April. This is evident in the Miner Profit/Loss Sustainability metric, which measures the growth of miner revenues relative to the growth of the mining difficulty.
The uptick in miner profitability suggests there could be less BTC selling pressure from them because they would not need to offload their holdings to handle operational costs.
Bitcoin’s latest rally has also caused daily miner revenues to increase by roughly 50%. Compared to a year-to-date low of $22 million early this month, total daily miner revenues currently hover around $32 million. Notably, higher revenues bolster Bitcoin’s hashrate recovery.
Bigger Miners Are Accumulating BTC
As profitability and revenues increase, BTC outflows from miners have remained lower than earlier this year. When BTC rallied to $70,000 in early March, daily miner outflows hovered between 10,000 and 20,000 BTC, and after the halving in April, the figures remained high. However, the outflows have fallen to 5,000-10,000 BTC in July.
It is worth mentioning that bigger Bitcoin mining entities have been increasing their holdings while smaller firms have been selling. The total balance of large miners currently sits at 65,000 BTC, up from 61,000 at the start of the year, while small miners’ balance has dipped from 59,000 BTC to 51,000 BTC within the same timeframe. Smaller miners have offloaded more of their bitcoins after the halving event.
CryptoQuant warned that miners might face the risk of remaining at “depressed levels” with regard to fees because their profitability is too dependent on bitcoin’s price.
