All that noise about the halvening being the dawn of a new era for Bitcoin and its prices will hopefully begin to fade now. Data from a firm called ByteTree, which tracks the amount of BTC sold by miners (among many other metrics), and keeps tabs on wallets owned by miners, shows that miners have begun selling BTC they must have been keeping aside for a rainy day.
Selling More Than They’re Earning
About 6,500 BTC were sold over the week ending June 1st, with only 5,800 of that being recently mined. To make it plain: miners are having to dip into their savings accounts in order to stay afloat now that their hourly earnings (in BTC) have been cut in half.
You can’t blame the miners. They have to stay afloat somehow.
Later this month, Bitmain will start shipping a new generation of Bitcoin miners. These will be more efficient, and generate more BTC for the energy used. But the Bitcoin price has yet to properly respond to a decreased supply schedule, and it leaves one wondering.
People say a lot of things about Bitcoin. One of the standby routines is to talk about how the decreasing supply makes it the perfect currency. But people often forget that a huge percentage of the price of BTC is based purely on speculation. Third-party markets, often populated by people who have no philosophical interest in Bitcoin, trade the commodity on a constant basis. There was some bullish action just before the supply was cut in half, but you would expect something akin to a doubling in price – which we haven’t seen anything like.
What we seem to be learning in the post-halvening world is that diminishing supply does not necessarily equate to increased demand. And those currently in demand don’t seem willing to pay higher and higher prices.
A Dwindling Community?
There are cultural aspects to consider. The “toxic maximalist” trope is useful here. Without a welcoming community attitude, demand can easily stagnate. The price is back over $10,000, but for how long? “Hodlers” essentially remove themselves from the market, further diminishing supply, but still we don’t see a higher unit price.
Instead, as we’ve illustrated above, we see miners making up the difference by selling older coins. The cost-basis of many BTC is far, far below $10,000, and therefore it might take years for all that coin to reach a new plateau in terms of base price. In the meantime, people might be willing to sell for as much as 80% lower than that, depending on where they bought in. And when the market shakes, as it often does (violently), we see these people in action, adding sell pressure and knocking longs off the margins.
“Something is only worth what someone else is willing to pay for it,” my father used to say. Personally, I question whether I know anyone willing to actually pay $10,000 for a single Bitcoin, let alone $20,000. There are, after all, few unique utilities for the cryptocurrency, and the same “toxic maximalists” who unwittingly push newcomers away have an effect on the technological aspect of Bitcoin. Bottom line is that after all this time, it’s still mostly useful for online gambling and not much else. Bitcoin itself is more expensive to use when shopping due to transaction fees, which leads me to my other thought.
Perhaps this stagnating period in Bitcoin’s history will lead to a resurgence in the altcoin markets. Is it Bitcoin Cash’s time to shine? Personally, I wouldn’t mind seeing as much. What about you? Let’s hear it in the comments.