Glassnode report: The selling pressure of Bitcoin miners is coming!
Original title: "The Week On-chain (Week 26, 2021)"
Original author: Checkmate, Glassnode
Original compilation: Moni, Odaily Planet Daily
Since mid-May this year, the Bitcoin market began to show signs of selling. However, it has now recovered to around US$35,000.
After the largest mining machine outage in history, the computing power of Bitcoin’s entire network plummeted, and miners’ selling pressure followed Now, industry insiders speculate that they need to sell BTC to pay for mining machines The operating cost of the transfer. Also, last week's grayscale of Bitcoin Trust funds GBTC, various exchange traded fund (ETF) products, and CoinbaseDigitalCurrencyThe dynamics of holdings are also worthy of attention .
The second round of "surrender"
In May of this year, the price of Bitcoin appeared within the year The first "capitulation", and just last week (the last week of June), the market "capitulated" again, with a record loss of $3.45 billion - when the last move at a higher price (creating UTXO) When Bitcoin is spent again (UTXO burn) at a lower price, the loss occurs on-chain. (Note that larger dollar-denominated gains and losses are also quite possible as bitcoin market valuations increase.
This means, this week A large number of "sinking" bitcoins were sold off, and it is worth noting that almost all long-term holders made a profit, and their "spending" (spending) actually offset the net loss of 383 million US dollars. The total realized loss (total realized loss) is as high as $38.33! At present, the proportion of unrealized loss (unrealized loss) bitcoin held by long-term holders is only 2.44%.
On a more relative basis, we can actually focus on another indicator: Spent Output Profit Ratio (SOPR), which allows us to On a relative basis, comparing the recent setbacks of Bitcoin. We can analyze the indicators of the profit rate of spent output of two groups of people:
1. Long-term Holder (Long-Term Holder, LTH)
2. Short-Term Holder (STH)< /span>
Although these two indicators are listed in the same calculation method, they may need to be interpreted separately:
*t Long-term holder SOPR (pictured left , orange), realized profits increase because they are usually in a profitable position. As shown, the long-term holders have a spent output ratio of 1.95, which means that overall, they realized 195% of their profits, But on the other hand, the profit rate of spent output of long-term holders has also begun to fluctuate recently, although the fluctuation range is lower than that of short-term holders SOPR;
* Short-term holder SOPR (right, blue in the picture below), as shown in the figure As shown, the short-term holder's spent output profit rate usually fluctuates around 1.0, because the recent market shocks are more obvious, especially recently, you will find that the recent short-term holder's SORP value is below 1, which means It means that they should have suffered heavy losses recently.
As long-term holders -SOPR volatility increases, and short-term holders- The market situation shown by the deep "surrender" of SOPR, the price of Bitcoin has indeed entered a downward trend this week. Overall, this market rout appears to have created a degree of panic among long-term holders as well as short-term holders, whose realized losses were only slightly lower than in March 2020, when the coronavirus-induced market The crash, and the average cost that long-term holders are now willing to spend on digital currencies that basically fluctuate between $920 and $1,630, all point to a high degree of uncertainty in the market.
However, despite some evidence that current long-term holders are panic selling, almost all tracking digital currency "lifespan" (lifespan) All indicators continue to decompose towards the level before the bull market. Our explanations for this situation may be as follows:
1 , Some long-term holders sold their digital currencies during market volatility, and the reason for selling at this time may be based on cost spread panic.
2. Most long-term holders did not choose to sell their digital currency because the digital currency that has been transferred It is still "young" (that is, it has not been dug out or held for a long time), although the market's realized net loss has reached 3.45 billion US dollars.
3. Market selling pressure mainly comes from short-term holders. Among all the circulating supply of their holders, about 23.5% had unrealized losses, while only 3.4% realized profits.
The selling pressure of miners is coming
With the largest migration of Bitcoin’s entire network computing power in history, The market has been speculating on the magnitude of the miners' selling pressure, because the miners' selling pressure is likely to bring resistance to price increases. For now, there are two main factors that may lead to increased miners' selling pressure:
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1. The sharp decline in the income of miners, coupled with the fact that the price of bitcoin has been almost halved recently, has led to miners being forced to sell more bitcoins to convert them into legal tender to pay for operating costs.
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2. Due to the relocation or liquidation of mining equipment, miners have to liquidate the bitcoins already held in the inventory, and pay for the generated bitcoins by converting them into legal tender logistics costs and risk hedging, these costs may last for several months.
In order to show the analysis results more intuitively, we evaluated the total Changes in income (7-day average). In fact, the income of Bitcoin miners maintained a relatively stable level in March and April, but then the income of the Bitcoin mining market fell by about 65.5%. The current 7-day average Mining revenue is around $20.73 million/day, but even that is still 154% higher than when the Bitcoin block reward was halved in May 2020.
Above: Real-time graph of Bitcoin miners’ income
Bitcoin mining difficulty, on the other hand, has only increased by 23.6% over the same period. The mismatch between miner revenue and mining difficulty is largely due to a global shortage of semiconductor chips that limits miners’ ability to expand their operations. In this case, it means that mining Bitcoin in the first half of 2021 will be very profitable, and those Bitcoin mining hardware that should have been outdated can still continue to be profitable. In other words, miners only need to sell less Bitcoin can cover operating costs and build its own Bitcoin inventory reserve.
Despite a 154% increase in 7-day average revenue, The difficulty of the Bitcoin mining puzzle has increased by 23.6%. Since a large number of mining machines are currently in the "offline" and "transfer" status, the next Bitcoin mining difficulty adjustment is expected to be large (-25%). Therefore, unless the price of Bitcoin falls further, or the "offline" and "transfer" miners can quickly resume mining online in the short term, miners who insist on continuing to operate may obtain higher profits in the next few weeks.
Above: Real-time graph of Bitcoin mining difficulty
In large part, this shows that Bitcoin miners who insist on continuing to operate are not It is too likely to "excessively" and "forcibly" sell the bitcoins they hold (corresponding to the first point of the above reason), so Chinese miners are more likely to be the current main source of sellers, and they need to liquidate the inventory bitcoins to pay for the mining machines Transfer and operating costs (corresponding to reason point 2 above).
So, the next question is whether Bitcoin miners are liquidating their inventory to cover the risks and costs of relocating their mining machines. Here, let's first look at the total balances held in miners' wallets and find that since January 27th Bitcoin Since the price low, miners have added a total of 10,000 BTC to their inventory, accounting for 7.6% of the total Bitcoin mined, implying that miners have distributed 92.4% of their "inventory" during this period.
We can also see that at the beginning of June, a total of about 7,000 bitcoins were spent in the miner’s wallet, which is likely to be a miner or A group of miners began to liquidate their bitcoins in preparation for migrating their mining rigs.
Above: Real-time chart of bitcoin miner wallet balance
We also tracked miners sending to exchanges The velocity at which bitcoins are being sent to assess relative selling pressure. Here we use a 14-day moving average to compare data over the same period as the difficulty adjustment window.
Compared to the whole year of 2020 and the first quarter of 2021, during these two time periods, the selling volume of miners on digital currency exchanges basically remained at 300 to 500 per day. Selling pressure was actually significantly lower than during both periods. In March, miners were inflowing about 500 bitcoins per day into digital currency exchanges, and by June it had dropped to 200 bitcoins per day.
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Above: A real-time chart of bitcoin inflows from miners to digital currency exchanges
We also reviewed some monitored OTC platforms According to the current Bitcoin situation, OTC exchanges are also another main channel for miners to sell Bitcoin. Generally speaking, OTC transactions are closely related to changes in market trends. Throughout 2021, the OTC transaction volume of Bitcoin will show A "declining" trend: From April to June, the over-the-counter trading volume of Bitcoin has remained between 8,000 and 6,000, but in the past two weeks, the net outflow of Bitcoin in the OTC market has only been about 1,134 pieces.
Above: Over-the-counter bitcoin real-time chart
Institutional demand starts to ease
The main driver of bitcoin price increases in 2020 and 2021 is increased institutional demand, one of the biggest factors being the one-way inflow of bitcoin into Grayscale (Grayscale) Bitcoin Trust Fund GBTC. As a result of many traders trying to arbitrage, we have observed GBTC remain at a high premium throughout 2020 and early 2021.
However, since February 2021, the high premium of GBTC has not been maintained, and they have to trade at a discount to the net asset value. In mid-May, the premium rate of GBTC has reached -21.23%. However, as the market sell-off intensified, the GBTC discount started to close up again, with the Grayscale Bitcoin Trust trading at a discount to NAV between a low of -14.44% and a high of -4.83% in the last week of June.
Currently, Grayscale’s Bitcoin Trust Fund GBTC holds more than 651,500 Bitcoins, accounting for 3.475% of the total circulating Bitcoin supply .
Above: Grayscale Bitcoin Trust Fund GBTC premium rate real-time chart
It is worth mentioning that Canada also has two bitcoins Exchange-traded fund products:
1, The Purpose Bitcoin ETF
The analysis of these two products can also further understand the recent institutional needs , The total number of bitcoins managed by The Purpose Bitcoin ETF has been growing. Since May 15, the net inflow has reached 3,929, which is equivalent to a daily inflow of 95.83 BTC (calculated on a 7-day basis). The total Bitcoin holdings of exchange-traded funds has reached 21,597.
Above: The Purpose Bitcoin ETF Bitcoin holdings real-time chart
In terms of quantity, at this stage The Purpose Bitcoin ETF's management The total amount of bitcoins in the 3iQ Digital Asset Managpent QBTC ETF has surpassed The 3iQ Digital Asset Managpent QBTC ETF. But if the two are combined and analyzed, the outflow of bitcoins in these two bitcoin exchange-traded funds reached 8,037 bitcoins in June.
Above: The 3iQ Digital Asset Managpent QBTC ETF Bitcoin holdings real-time chart
Finally, on the institutional side, we can observe Net change in token balances held by Coinbase, the preferred trading venue for US institutional investors during the bull market. Since Since December 2020, Coinbase has continuously outflowed BTC for a period of time, but now the change of Coinbase Bitcoin balance has obviously leveled off.
Above: Bitcoin holdings on digital currency exchanges Volume real-time chart
Through analysis, we found that the premium rate of Grayscale Bitcoin Trust Fund GBTC narrowed, The 3iQ Digital Asset Managpent QBTC ETF and The Purpose Bitcoin ETF’s total bitcoin net outflow increased, and Coinbase’s bitcoin balance growth stopped, so it can basically be asserted that institutional demand seems to be in a relatively sluggish state at this stage, and market recovery remains to be seen.
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