BTC miners’ over-the-counter market balance hits a two-year high, or is this a bad signal?

CryptoQuant, a cryptocurrency data analysis platform, recently released a report stating that miners' Bitcoin balance in the over-the-counter market has hit a new high since June 2022. It increased from 215,000 BTC in June to 368,000 BTC (about US$22.36 billion) in August, a surge of more than 70% in the past three months.

CryptoQuant said miners choose to sell Bitcoin through OTC transactions because they seek "better execution prices." The OTC market is more liquid and they want to avoid selling directly through cryptocurrency exchanges because that would Significant impact on Bitcoin price.

It is worth noting that historically, a sharp increase in miners’ Bitcoin balances in the OTC market has usually foreshadowed a sharp drop in Bitcoin .

In May 2018, when miners’ Bitcoin balances on the OTC market soared to 400,000 Bitcoins, the price of Bitcoin was $8,475, but by December 2018, Bitcoin had fallen 63% to $3,183.

Similarly, in November 2021, when the Bitcoin price was around $64,000, miners’ Bitcoin balances in the OTC market were at an all-time high of nearly 500,000 Bitcoins, before Bitcoin fell 45% to $35,058 two months later in January 2022.

Although things look bad now, Cointelegraph analyzed that the recent decline in the supply of Bitcoin on cryptocurrency exchanges, coupled with the fact that Bitcoin whales have hoarded 94,700 Bitcoins in the past 6 weeks, may balance the selling pressure and support the price of Bitcoin.

Since the Bitcoin halving in April, miners have been hit by rising operating costs and reduced mining rewards. If they are not very capable miners, they will face mining at a loss. According to MacroMicro data, the current average cost of mining a Bitcoin is $72,224 (but the author speculates that this should be an overestimated figure).

Analyst Colin Harper shared data pointing out that every mining company's revenue in the second quarter was less than in the first quarter, but some mining companies are better coping with the reduction in revenue by expanding their computing power in the third quarter. Every mining company is seeking to upgrade to the latest mining equipment to increase computing power and reduce energy costs.

As mining companies face huge challenges, VanEck recently released a report suggesting that if Bitcoin mining companies partially shift to providing energy to AI and high-performance computing (HPC) by 2027, they could potentially earn an additional $13.9 billion in annual revenue:

“AI companies need energy, and Bitcoin miners have energy.”

It may also become a new source of revenue for these mining companies.

BTC Miner OTC Trading Hits Two Year High, Now or Never?