FameEX Hot Topics | Bitcoin Miner OTC Balances Hit 2-Year High — Here's Why It Could Signal a Bearish Trend

Cryptocurrency miners are holding the highest amount of Bitcoin to be sold in over two years, raising concerns about potential price drops. According to a CryptoQuant report dated August 21, historically, an increase in Bitcoin OTC desk balances has correlated with subsequent price declines. 

Recently, Bitcoin OTC desk balances saw a massive 70% increase over the last three months, reaching 368,000 Bitcoin or approximately $22.36 billion as of the latest data. This level has not been observed since June 2022 and suggests significant selling activity among miners.

Looking back, significant spikes in OTC balances have led to sharp price falls. For example, in May 2018, when Bitcoin OTC balances exceeded 400,000 BTC, the price of Bitcoin was $8,475. By December 2018, it had plummeted by 63% to $3,183. Similarly, in November 2021, with the price at around $64,000 and OTC balances peaking near 500,000 BTC, Bitcoin’s price fell 45% to $35,058 by January 2022.

Miners often prefer OTC transactions for selling Bitcoin to ensure better execution and to minimize market impact, as these platforms offer higher liquidity compared to public crypto exchanges. However, recent market activities could offset some selling pressures. There has been a notable decline in Bitcoin availability on exchanges and significant acquisition by Bitcoin whales, who have amassed 94,700 coins in the last six weeks. These factors could help support Bitcoin’s price.

Despite the potential for price support, the economic environment for miners has become increasingly challenging. Since the Bitcoin halving in April, operational costs have risen, and mining rewards have diminished, rendering the average miner's operations unprofitable. Current data shows the cost to mine one Bitcoin is about $72,224, whereas the market price is around $60,797.

Bitcoin analyst Colin Harper highlighted in an August 22 post that miners faced reduced earnings in Q2 compared to Q1. However, some miners managed to mitigate losses by expanding their hashrate and updating their mining equipment to more efficient models. These strategic adjustments are crucial as miners navigate through fluctuating market conditions.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.