Bitcoin miners hedging with recent sell-offs - Bitfinex report
Bitcoin (BTC) mining companies are employing derisking strategies by offloading Bitcoin to exchanges, according to a market report from Bitfinex.
The cryptocurrency trading platform’s latest newsletter addresses the Bitcoin mining sector at length, highlighting a recent surge in miners selling large volumes of BTC to exchanges. This has led to a corresponding increase in value of shares in Bitcoin mining companies as institutional interest in BTC picks up in 2023.
The report notes that Poolin has accounted for the highest amount of BTC sold to the market in recent weeks. Bitfinex analysts also note that the Bitcoin mining difficult recently hit an all-time high, which it labels as an indicator of “robustness and miner confidence”:
The report goes on to suggest that miners are hedging positions on derivatives exchanges, with 70,000 BTC in 30-day cumulative volume transferred in the first week of July 2023.
Related: Bitcoin miners raked $184M in fees in Q2, surpassing all of 2022
While miners historically transfer BTC to exchanges using derivatives as a hedge for large spot positions, the report labels the high volumes as uncharacteristic:
Bitfinex also cited data from Glassnode that indicated that Poolin has been responsible for a large portion of this activity, with the BTC mining pool offloading BTC to Binance.
The analysts note that several plausible reasons could be behind recent mining behaviour. This could include hedging activities in the derivatives market, carrying out over-the-counter orders or transferring funds through exchanges for other reasons.
The increase in mining difficulty is also indicative of new mining power being added to the Bitcoin network. Analysts suggest that this is seen as a sign of
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