While Bitcoin has been holding steady around the $60,000 mark, and we’re all hopeful about a possible interest rate cut from the Fed leading to a new breakout, there’s one thing that might raise a few eyebrows. The amount of Bitcoin that miners have ready to sell has climbed to its highest level in two years. If we look back at how this has played out before, it could mean we might see a short-term dip in Bitcoin’s price.
So, could Bitcoin be heading for a crash?
There have been several instances in the past where a spike in miners’ OTC (over-the-counter) balances was followed by a drop in Bitcoin’s price. In some cases, the drop was as steep as 63% over just a few months. According to a report from CryptoQuant on August 21, “Historically, increases in Bitcoin OTC desk balances have been associated with declines in Bitcoin prices.”
Right now, these balances have risen to levels we haven’t seen since June 2022. Over the last three months, there’s been a 70% increase in these balances. To put it into perspective, we’re talking about around 368,000 Bitcoin, or roughly $22.36 billion. CryptoQuant notes that this spike could indicate that miners might be gearing up to sell off a significant amount of Bitcoin.
Should we be worried?
Let’s take a quick look at history. In May 2018, miners’ OTC desk balances soared above 400,000 Bitcoin. At the time, Bitcoin was trading at $8,475. By December of the same year, the price had plummeted by 63% to $3,183. Fast forward to November 2021, and we saw something similar. Bitcoin was sitting around $64,000, with miners’ OTC balances hitting an all-time high of 500,000 Bitcoin. Just two months later, in January 2022, Bitcoin’s price had dropped by 45%, down to $35,000.
CryptoQuant explains that miners prefer OTC deals because they allow for “better execution” without causing big swings in the Bitcoin price. But if these miners decided to sell those hundreds of thousands of Bitcoin on the open market, it could trigger a major downturn. Given this data, it’s wise for us to stay alert and keep an eye on the situation.
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