Long-term Bitcoin holders and miners have been substantial sellers of the cryptocurrency over the past two weeks, with little sign of renewed buying interest. This trend is evident through a decrease in UTXO age bands, indicating increased selling activity. According to on-chain analysis firm CryptoQuant, wallets tracked by the firm show that large holders, often referred to as “whales,” sold over $1.2 billion worth of BTC during this period, likely using brokers instead of selling on the open market.
Miners Shifting Focus to AI Sector
Some experts believe that miners are redirecting their focus to the burgeoning artificial intelligence (AI) sector due to the diminishing mining rewards post-halving. This shift may have contributed to the increased selling activity. Lucy Hu, a senior analyst at crypto wealth management company Metalpha, noted, “One of the biggest trends since Bitcoin halving this year is that miners are increasingly diverting to AI business. The fall of the mining rewards prompted miners to seek other channels to boost revenue. With AI firms demanding energy-intensive data centers, Bitcoin miners are gradually growing revenue from the sales with AI firms.”
#Bitcoin long-term holder whales sold $1.2B in the past 2 weeks, likely through brokers.
ETF netflows are negative with $460M outflows in the same period.
If this ~$1.6B in sell-side liquidity isn't bought OTC, brokers may deposit $BTC to exchanges, impacting the market. pic.twitter.com/oYeKsRqKeF
— Ki Young Ju (@ki_young_ju) June 18, 2024
Decrease in UTXO Age Bands
The decrease in UTXO age bands, tracked by CryptoQuant, reflects the increased selling activity. UTXO, or unspent output from Bitcoin transactions, is used by traders to track buying and selling patterns across different market cycles. A drop in UTXO age typically indicates a rise in Bitcoin activity and selling, while an increase suggests more holding in the market.
ETF Outflows and Market Impact
The selling activity coincides with net outflows from U.S.-listed Bitcoin exchange-traded funds (ETFs) over the same period. Last week, ETFs tracking Bitcoin recorded net outflows of over $600 million, marking their worst performance since late April. This trend has contributed to the recent price decline of Bitcoin from $71,000 on June 5 to just over $65,000 as of Wednesday, driven by a strong dollar, a shift away from riskier assets, and growth in traditional stock indices.
Market Sentiment and Predictions
CryptoQuant analysts highlighted that traders are not increasing their Bitcoin holdings and that demand growth from large holders is still lacking. “Traders are still not increasing their Bitcoin holdings and large holders’ (whales) demand growth is still missing strength,” the analysts wrote. The liquidity of stablecoins has continued to slow down, growing at the slowest pace since November 2023.
Some market observers warn that Bitcoin prices could drop as low as $60,000 in the absence of growth catalysts. Despite these concerns, the broader cryptocurrency market, as indicated by the CoinDesk 20 (CD20) index of the largest tokens, showed a slight increase of 1.2% over the past 24 hours, while Bitcoin itself was down 0.6%, according to CoinDesk data.
In summary, the recent selling activity by long-term holders and miners, combined with significant ETF outflows, has put downward pressure on Bitcoin prices. The market is closely watching for new catalysts that could provide a boost to Bitcoin and the broader cryptocurrency ecosystem.
