Bitcoin (BTC) fell to lows of $ 28,950 on Jan. 22 as miners likely sold large amounts of their holdings – but big buyers ensured the decline was minimal.
According to the on-chain monitoring resource CryptoQuant, there has been tremendous drainage from mining pools in the past few days, which in turn represented a BTC / USD loss of 20% per week.
The daily outflows from F2Pool reached 10,000 BTC
From January 15, in particular, the outflows from F2Pool – currently the largest mining pool with around 15% of the total hash rate – began to increase. By Jan 17, daily outflows had reached 10,000 BTC ($ 313 million) and continued for three days in a row before returning to normal levels.
F2Pool appears to be responsible for the vast majority of the outflows, which doesn’t necessarily mean that miners sold BTC in the open market, just that they removed mined coins from their original wallet.
F2Pool BTC flows out of the daily chart. Source: CryptoQuant
Regardless of the pool’s motives, the numbers form a welcome counter-argument that explains Bitcoin’s sudden drop in prices this week. Previously, theories such as the stablecoin tether (USDT) controversy and a recovering dollar were touted as the main causes of the downward volatility.
Meanwhile, Bitcoin exchange rate balances remained steady in January, in contrast to the general downward trend that has existed since summer 2019, data shows.
Exchange Bitcoin Reserve Chart. Source: CryptoQuant
Selling occurs amid huge grayscale purchases
Should the F2Pool coins have formed a large amount of new BTC products for sale in the market, it is likely that buyers in particular would have sucked them in pretty quickly.
As reported by Cointelegraph, asset management giant Grayscale added noticeable amounts to its assets under management this week that may help BTC / USD avoid a deeper dive.
Grayscale BTC stocks. Source: Bybt.com
The company’s recently released Q4 2020 report, which said the institutes provided 93% of its inflows, reinforces the idea that it is the main buyer of BTC replacement supplies.
CEO Michael Sonnenshein assumes that the interest of financial advisors in the Bitcoin area will increase in 2021 and the associated investment risk will decrease.