New data shows that Bitcoin miners have caused price volatility, with Bitcoin hitting $3,100 in 2018.
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Miners sell off before bitcoin prices bottom out
In the latest analysis uploaded to social media on October 11th, the chain intelligence resource Token Analyst showed that miners selling directly affected the price of Bitcoin. Specifically, the massive sell-off coincides with a drop in BTC/USD to $3,100 at the end of last year. A large amount of Bitcoin was transferred to the exchange in June and August, “making the price fall further.”
Token Analyst concludes:
“We see that miners sell in large quantities using volatility.”
Bitcoin mining map
The data is based on a previous finding by Decentral Park senior research analyst Elias Simos, who tracked the return of bitcoin mining over time in August. More independent miners received these mining awards before the block rewards were halved in 2016.
“In the beginning, 70% of the mining rewards were assigned to entities associated with non-mineral pools. The figure is now about 25%,” Simos found. He described the current mining period as "professional mining era."
Miners and price controls
Token Analyst's data adds momentum to the theory that miners play an overall role in determining bitcoin prices.
As previously reported, famous critics are increasingly aware of this phenomenon. The most important of these is PlanB, whose stock-to-flow bitcoin price model has proven the importance of miners' participation.
Another famous hypothesis supported by Filb Filb, Cole Garner and others revolves around the miners who maintain the lowest BTC price.
This week, Garner cited the idea of bitcoin creator Satoshi Nakamoto. In 2010, Nakamoto said that the price of a commodity “tended to lean toward production costs”.
“If the price is lower than the cost, then production will slow down. If the price is higher than the cost, you can profit by generating and selling more products.”
Therefore, miners are unlikely to sell at less than $6,400 under current conditions, and conclude that this number represents the new price floor for Bitcoin.
For everyone, the next halving in May 2020 is a crucial moment. As in 2016, after the block award falls to 6.25 BTC per block next year, the overall trend should start to establish new price highs.