Miners can sell $5 billion in Bitcoin after the halving event

15 Apr 2024

Miners dumping large amounts of Bitcoin can last from 4 to 6 months after the halving event, with a value of up to 5 billion USD.

According to market analysis firm 10x Research, a large amount of Bitcoin will be released into the market by miners in the months following the Bitcoin Halving event, replicating what happened in previous cycles.

Mr. Markus Thielen, Head of Research at 10x Research, said that Bitcoin mining companies have the ability to liquidate $5 billion worth of BTC after the halving.

“The sell-off could last 4-6 months, causing Bitcoin price to move sideways over the next few months, like previous halvings,” he added.

Accordingly, Bitcoin prices usually move sideways within 6 months of mining reward halvings. The evidence is that Bitcoin price was in the range from 9,000 USD to 11,500 USD in the 5 months after the 2020 halving event.

This year, the halving event is expected to take place around April 20, 2024. Therefore, the market will not show any signs of significant increase until around October 2024 if the predicted scenario is correct.

Besides, Bitcoin mining companies tend to hoard BTC, leading to an imbalance between supply and demand and causing Bitcoin prices to increase before the halving event.

Specifically, BTC price has increased 74% since the beginning of 2024 until now, reaching a historical high of 73,734 USD on March 14 before adjusting to below 63,000 USD in mid-April.

Thielen also said that altcoins were also hit hard in this decline. Many tokens have plummeted over the past week, with the majority of them not even reaching their 2021 ATH.

“Even if there is a correlation between the halving event and the altcoin price rally as some previously predicted, historical evidence shows that the new price increase usually begins nearly 6 months after the event,” Mr. Thielen shared. .

In addition, Mr. Thielen said that the world's largest Bitcoin mining company, Marathon, has accumulated a large amount of BTC in recent times to gradually sell after the halving to prevent revenue decline.

Currently, Marathon company mines 28-30 BTC/day. Based on the total number of BTC they mined post-halving of 14-15 BTC/day, the company plans to provide 133 days of additional supply to the market. Notably, Bitcoin mining difficulty continued to set new records before the halving event, increasing by nearly 4% on April 11.

“Other Bitcoin mining companies will implement a similar strategy to gradually liquidate their Bitcoin inventories,” Mr. Thielen said.

The researcher concluded that in case all miners have a similar strategy to release their stored assets post-halving, the maximum BTC sale volume could reach up to 104 million USD/day.

Last week, Marathon CEO Peter Thiel said the company's breakeven rate would be around $46,000/BTC to maintain profitability after the halving. He also predicts there will hardly be any significant price fluctuations within 6 months after the event.

Bitcoin mining difficulty increased nearly 4%, reaching an all-time record of 86.4 trillion hashes in the final adjustment before next week's halving event.

According to blockchain tracker Mempool, after the latest adjustment, which took place at block height 838,656, Bitcoin mining difficulty increased by 3.9% to a new record of 86.39 trillion hashes.

Meanwhile, the average hashrate of the BTC network has reached 657.87 EH/s, an increase of 3.92% compared to the peak of 618.77 EH/s at the end of March.

BTC mining algorithm difficulty is a concept that refers to a self-regulating mechanism of the world's largest cryptocurrency network. Accordingly, every 2,016 blocks (about 2 weeks), the mining algorithm will be changed with the aim of maintaining the block generation time around the target every 10 minutes. If the hashrate increases, indicating that there are many active miners, the system will increase the difficulty, and vice versa.

However, while miner revenue also increased this year due to rising Bitcoin prices, the impact of the halving on mining operations was less effective and thus the overall network metrics after the halving. The reduced bonus has not yet been clearly determined.

From mid-2021 to the present, Bitcoin mining difficulty has increased continuously from 13 trillion hashes and continuously set new ATH levels.

Halving is another automatic mechanism of Bitcoin, designed to create deflationary pressure on this currency. Accordingly, after every 210,000 blocks, the amount of rewards generated from miners' block mining activities will be divided in half.

There have been three halvings in the history of Bitcoin:

  • Bitcoin's first Halving took place on November 28, 2012, at which time Bitcoin's block reward was reduced from 50 BTC to 25 BTC;
  • Bitcoin's second halving took place on July 9, 2016, at which time Bitcoin's block reward was reduced from 25 BTC to 12.5 BTC;
  • Bitcoin's third Halving took place on May 11, 2020, the block reward at this time is only 6,125 BTC;
  • During the next halving, the block mining reward will be reduced from the current 6.25 BTC to only 3,125 BTC. Halving events will continue until the last Bitcoin is expected to be mined around 2140. After that, miners will only earn from transaction fees.

According to The Block's Bitcoin Halving countdown page, the next halving event is currently estimated to take place at around 11 am (Vietnam time) on April 20, 2024.

Historically, Bitcoin halving has been associated with significant fluctuations in the price of the cryptocurrency. While not a direct relationship, these events often precede significant price increases in the Bitcoin market.

Bitcoin's price is currently trading around 70,200 USD, up about 3% in the last 24 hours since the US CPI news "stained the whole market red". But from the beginning of 2024 until now, this is an increase of more than 65%.

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