Bitcoin prices took a nosedive in June, plummeting from over $73,000 to the $62,300 range. This decline was largely driven by a wave of selling from cryptocurrency miners facing financial strains.
Mining Sell-Off Pressures
Following the halving of rewards on the Bitcoin network in April, cryptocurrency miners experienced a significant decrease in earnings. With many mining companies ceasing operations, those that continued accelerated their Bitcoin sales to cover expenses until profitability was restored. This surge in sales is considered a major contributing factor to Bitcoin's downward trajectory.
- Daily mining revenues plummeted from an average of $107 million before the reward reduction to just $30 million.
- Data from Into the Block indicates that Bitcoin miners have offloaded over 30,000 bitcoins valued at nearly $2 billion since June alone.
- The reduction in mining activity led to a notable decrease in Bitcoin's difficulty rate, with the latest hash rate dropping from 88 trillion to 83 trillion.
Impact on ETF Market
Bitcoin's downturn is also having a negative effect on the ETF market. Conversely, a significant factor that bolstered Bitcoin's price was ETF investments. The digital currency, supported by Bitcoin ETFs, surged to new highs this year, reaching $73,000. Nevertheless, the subsequent selling pressure impeded Bitcoin's progress. Some analysts believe that this selling pressure could diminish once new equilibriums are established in the mining sector.
Nonetheless, the ongoing downward trend in Bitcoin continues to impact ETFs. Ultimately, as Bitcoin dropped below the $65,000 mark, ETFs experienced an outflow of around $200 million.