On May 24, the price of Bitcoin (BTC) increased from $9,300 to $8,750. Over the next 24 hours, it hit a low of $8,600, increasing the chances of a big pullback.
The initial contraction below $9,000 coincided with a massive inflow of BTC on exchanges: on-chain data shows that some key figures in the industry sold large amounts of cryptocurrency over the weekend.
Who is selling Bitcoin?
The role of exchanges is primarily to match the orders of sellers and buyers. In other words, to buy Bitcoin for $9,000 you need another user on the trading platform who is selling BTC at that price.
Willy Woo, a well-known analyst in the cryptocurrency industry, commented on this:
„When we say that traders are ‚buying‘ or ’selling‘, it is a myth. Every trade is matched, every trade has a buyer and a seller. Therefore, when we say that the market is buying or selling, we actually mean that smart money [a term that refers to all experienced and well-informed investors] is buying or selling.
When miners sell the
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they generate, they apply strong selling pressure to the market. According to CryptoQuant data, on May 24th, Bitcoin’s inflow to the exchanges peaked at 2,435 BTCs: in a single day, BTCs worth no less than $22 million were deposited.
Bitcoin inflow to exchanges
In addition, ByteTree data shows that miners have generated BTC 5,231 and sold BTC 5,846 in the last seven days. Therefore, the miners have sold not only all the BTCs they generated, but also 614 BTCs from their own stocks.
The situation in China could improve
For the large miners located in the Sichuan region of China, the rainy season will allow them to negotiate lower prices for electricity. This means that some companies will be able to get rates as low as $0.03/KW, reducing the cost of a single Bitcoin to around $6,000.
However, for miners operating outside of China, halving could continue to have a very negative effect on profit margins.
In summary, the data seems to indicate that the contraction of Bitcoin was caused by the miners, who sold large quantities of BTC between $9,300 and $9,400. This lowered the price of cryptocurrency, which also pushed many traders to sell.