Bitcoin lost 6% in one week even as Nasdaq climbed to an all-time high.
Crypto-specific factors like profit-taking by holders and increased selling by miners seem to be holding back the BTC price.
Bitcoin (BTC) has declined over 6% in seven days, deviating from its usually positive correlation with the equity market’s tech-heavy Nasdaq Composite Index.
While the popular narrative blames bitcoin’s slide on the Federal Reserve’s decision to signal just one U.S. interest-rate cut for the rest of the year, technology stocks extended gains after Wednesday’s decision, indicating crypto-specific factors may be stopping BTC from keeping pace with the Nasdaq.
“When a market continues to sell off at a specific level, it has less to do with events, narratives, or fundamentals. Instead, a large seller perceives prices to be overvalued at that level,” Markus Thielen, founder of 10x Research, said. “The November 2021 all-time high of nearly 70,000 is a level where long-term holders are willing to sell their Bitcoins, as they are the most likely candidates to cash out.”
Earlier this week, a wallet that had been inactive since 2018 moved 8,000 BTC worth over $500 million to crypto exchange Binance. A move from a wallet to an exchange is often a signal of an impending sale. The wallet reportedly acquired the BTC at less than $4,000.
Data tracked by analytics firm CryptoQuant show that the number of BTC inactive for at least 12 months and two years has declined, a sign of holders have taken profits as the bitcoin price holds near record highs.
“Addresses with supply inactive for 1 and 2 years have been selling since around price hit record high. This is offsetting accumulation by longer-term holders (+3-year),” Ilan Solot, co-head of digital assets at Marex Solutions, said in an email on Wednesday.
According to Thielen, 1.8 million BTC have not moved for over a decade, potentially including the 1.1 million BTC mined by Satoshi himself. “This is why we would also expect that most of the Mt. Gox holders will convert their BTC into fiat once they take possession of their BTC in October/November 2024,” Thielen noted.
Mt. Gox, a crypto exchange that imploded due to a hack in 2014, is gearing toward distributing 142,000 bitcoin (BTC) worth roughly $9.5 billion and 143,000 bitcoin cash (BCH) worth $73 million to creditors, CoinDesk reported in April. A distribution could pose a substantial overhang on digital asset prices. The trustees of the defunct exchange last year set an Oct. 31, 2024 deadline to reimburse creditors.
Another reason for BTC’s price weakness could be increased selling by miners, or those responsible for making coins. Miners receive BTC as a reward for approving blocks on the blockchain and additional revenue from user transaction fees.
Listed miner Marathon Digital (MARA) has sold 1,400 bitcoin worth $98 million this month. According to CryptoQuant, miners sold at least 1,200 BTC on June 10 via the over-the-counter desks, the highest single-day volume in over two months.
The hashrate, or the computing power dedicated to the Bitcoin blockchain, has declined from 622 exahashes per second (EH/s) to 599 EH/s this month. That’s a sign of miner capitulation.