Bitcoin (BTC) miners did send more BTC to exchanges at the end of last week, but so did others, according to Phillip Gradwell, Chief Economist at on-chain analytics and intelligence firm Chainalysis, which suggests that miners did not drive further price declines. Meanwhile, most of the BTC and ethereum (ETH) sellers in the “awful” past week were recent investors.
The announcement of tighter regulation on crypto mining and trading in China is one of the latest major entries to the list of possible causes of the most recent price fall. The announcement, however, has again raised questions in the industry about the importance of miners in the market, Gradwell wrote in his latest report.
But while miners are relevant for securing the network, “they have a limited effect on the market in the short-term.” 75% of BTC inflows to exchanges in May 2021 so far were from other exchanges, while miners were responsible for just 1% of exchange inflows.
“Miners do not provide that much liquidity to the market [and] while miners did sell more bitcoin at the end of last week, switching to selling on fiat exchanges rather than purely crypto exchanges, other people sold more bitcoin as well, so the relative importance of miners remained low,” the Chief Economist concluded.
According to ByteTree, in the past week, miners have sold more coins than they’ve generated. This hasn’t been the case in the past day though.
Cryptoasset prices are recovering after the last week’s selloff but major losses were recorded during the dip, as more than USD 3.2bn were sent on-chain at a loss by new investors, constituting the largest one-week USD loss of all time. However, the percentage losses were still below those of 2017 and March 2020 crashes, according to Gradwell.