When Bitcoin miners receive block rewards, they need to use it to pay off bills. Most people assume miners immediately move funds to exchanges. That is not the case any longer, as recent statistics confirm.
Bitcoin Miners Send Fewer Funds to Exchanges
Over the past few years, people have become less eager to spend Bitcoin. When the BTC value rises, there is less demand to spend this asset. One would expect the opposite to happen, but that is not always the case. Especially where Bitcoin miners are concerned, things are getting rather interesting as of late.
Based on the chart above, miners are not cashing out their earnings right away. In fact, the outflow from Bitcoin miners to crypto exchanges continues to dwindle as more time progresses. A new 13-month low has been reached where the 1d moving average is concerned. This is rather interesting to keep an eye on, especially given the current market circumstances.
A rising Bitcoin price will make the mining process more profitable overall. In theory, this creates an incentive for miners to sell off their BTC as quickly as possible. Bitcoin is, after all, a very volatile asset on any given day. Avoiding wild price fluctuations will increase overall miner profitability. With fewer people moving BTC to exchanges, one has to wonder what these people are waiting for exactly.
Less than 2 BTC has been moved from known Bitcoin miners to exchanges in the past day. This is a very big difference compared to the 40+BTC on a daily basis in March and part of April 2020. A steep drop off like this usually indicates something interesting is bound to happen. Whether that will be a new Bitcoin price surge, or something else entirely, remains to be determined.
Are Exchanges Losing Traction?
This latest mining development is very intriguing. It is another indication of how fewer funds are being moved to exchange wallets in recent times. It is also good to see this doesn’t just apply to long-term Bitcoin holders. Those people have kept millions worth of Bitcoin off the open market for years without batting an eye. As miners now begin to follow the same path, the overall Bitcoin liquidity may undergo some big changes.
That in itself would be a positive development. Bitcoin is often touted as being scarce, yet over 2.3 million BTC is found on centralized exchanges. For it to become truly scarce, moving more funds off exchanges is absolutely necessary. Bitcoin miners are showing that this can be done. The big question is whether they will keep sending fewer funds to exchange, or if this is a temporary dip in the statistics.