Miners start taking profits as BTC rallies above breakeven rates

Miners are one of the champions of long-term holding, sitting on 2M Bitcoin (BTC) for months. Recently, miners’ reserves fluctuated slightly, but they remain relatively high.

Miners are liquidating some of their holdings, taking advantage of Bitcoin (BTC) still trading close to the $90,000 mark. Miner reserves gradually decreased from 2.08M BTC to 2.03M BTC, extending a slide that started in August.

The recent price rally explains why miners continued to be highly competitive despite mining operations running below breakeven prices.

The cost basis of BTC ranges widely, from as low as $23,000 in 2023 to post-halving estimates above $73,000. Some of the latest BTC mined only turned profitable following last week’s rally. Miners often take profits to cover operations, though still with a long-term outlook due to previous experience.

Even the Royal Government of Bhutan joined the selling, sending 367.26 BTC to Binance after holding for months. Miner inflows are also at the highest level since the August sell-off, based on CryptoQuant data. The inflows followed a recent activation of a wallet from 2011, which contained mined coins from the Satoshi era.

Miner selling resumed after a slowdown in September, due to the prediction of a weak month of price appreciation. Inflows only arrived after BTC broke a series of all-time highs in a series of historically successful weeks in 2024.

Miners cause another selling spike near peak BTC valuations

Miner outflows do not exactly coincide with market tops, and there may be other reasons to take profits. Some of the biggest historical outflows happened in 2016, when BTC had its first more significant rally, causing a frenzy to take profits from older coins. In 2024, miners had several notable days of sending coins to exchanges during local peaks.

The most recent outflow recalled the peak activity in March 2020, when BTC briefly crashed under $4,000, creating market-wide panic. Miners have been concerned with getting the best price and setting up their operations for the future.

At the current price level, BTC expects further appreciation, with the possibility of breaking into six-digit prices. Based on the Rainbow Chart, BTC is still in an accumulation range, though much riskier. Any pullback can put recent buyers in the red. Additionally, newly mined BTC may be sold first to offset their high costs, after miners built new data centers and invested in new generations of machines.

As BTC retained some of last week’s gains, miners can still sell BTC for at least $15K profit, while mining at a loss and holding since April’s halving. Since BTC traditionally rallies a few months after the halving, the recent selling reflects the expectation that prices have at least reached a local peak.

Whales are not reluctant to take profits

Before breaking out above $93,000, BTC traded in a range. At that point, whales became more decisive, not reluctant to realize short-term gains. This time, former big buyers started cashing out.

Near the all-time high for BTC, whales are already taking profits, while retail buyers may be just entering the market. Large-scale wallets that bought at a lower range are returning their tokens to exchanges. Recently, a large whale deposited 1,920 BTC to Binance, piling on the price pressure. The coins moved over the course of three days, emptying out the wallet. The whale bought 967 BTC two weeks earlier, then waited for the rally to take profits.

Bitcoin (BTC) saw the most active spike of miner inflows to exchanges since March 2020. | Source: BGeometrics

Whale selling, especially if it occurs over a sustained period, can put pressure on the market and cause prices to drift sideways. Some ETFs also saw outflows, as buyers are also taking short-term profits.

Notably, BlackRock’s IBIT ETF continued to add more coins even after BTC stepped back from its peak.

Net unrealized profit for BTC is close to 2021 levels. The metric historically coincides with a market peak, suggesting BTC may see a drawdown following its price records. BTC spent years with unrealized losses after the 2023 bear market, and the current high level of unrealized profits once again points to a local market peak.

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