On-chain data shows the volume of Bitcoin miners has observed a steep drop recently. Here’s what this could mean for the asset.
Bitcoin Miners’ Volume Share Has Been Sharply Going Down Recently
In a new post on X, the market intelligence platform IntoTheBlock has discussed the recent trend in the Bitcoin Miners’ Volume Share. The “Miners’ Volume Share” here refers to an on-chain indicator that keeps track of the percentage of the total Bitcoin transaction volume (that is, the amount of BTC becoming involved in transfers on the network) that miner-associated transfers are making up for.
Below is the chart shared by the analytics firm that shows the trend in the Bitcoin Miners’ Volume Share over the past decade.
As displayed in the graph, the Bitcoin Miners’ Volume Share briefly rose beyond the 20% mark last year when BTC observed its Q1 rally. This suggests the miners were moving around large amounts on the blockchain, potentially to take advantage of the profit-taking opportunity that the run offered.
Since this peak, though, the indicator’s value has been going down. There was a temporary deviation towards the end of last year when BTC witnessed its new bull rally, which once again implied the miners were looking to cash in. The selloff lasting only briefly could suggest the miners ran out of coins to sell. Another potential interpretation of the trend, however, could be that it’s rather an increase in activity across the network that has forced Miners’ Volume Share to shrink.
From the chart, it’s visible that the pattern has been observed in past bull markets as well, which adds credence to the fact that it may be the transaction volume uplift caused by the fresh capital inflows that tend to take place in such periods that are responsible for the trend.
It’s also apparent, though, that the metric’s peak has been getting lower with each cycle. The reason behind this may be that the block subsidy, which miners receive as compensation for solving blocks and makes up for the bulk of their income, gets halved each cycle during an event known as the Halving.
Miners earning less naturally means that they also have a lower amount of capital to shift around on the network, which would show up on their share of the transaction volume.
Bitcoin Miners’ Volume Share has now plunged under the 5% mark, meaning that it has fallen lower than the bottom of the 2017 cycle. Though, it’s still yet to reach the same low as during the 2021 bull market.
BTC Price
Bitcoin has extended its losses by another 2% in the past day as its price has dropped to the $93,700 level.
