With the Bitcoin halving set to reduce mining rewards, analysts are expecting a major sell-off from the mining sector in the months following the major event. Markus Thielen, head of research at 10x Research, expects as much as $5 billion in value to be liquidated post-halving.
In an April 13 analyst note, Thielen shared his calculations and theorized that the large outflow of Bitcoin from the miners could result in some “sideways” movement for Bitcoin. He based his speculations on past market cycles and expects this period to last “four to six months.”
According to the analyst, it is common for miners to stock up on BTC, which in turn leads to a “supply/demand imbalance.” This often results in a “subsequent rally in Bitcoin prices” during the pre-halving period.
As witnessed over the past month, this scenario has already transpired, with Bitcoin surging to an all-time high of $73,734 on March 14. Thielen did not limit this to just BTC, adding that altcoins could also be on the sharp end of the knife, adding,
Even if there is a correlation between the halving and an altcoin rally, as some predict, historical evidence shows that the rally typically begins almost six months later.
Thielen also claimed that the premiere Bitcoin Miner Marathon might have been building an inventory of BTC. He theorized that it would gradually be sold “after the halving to prevent a revenue cliff from occurring.” A “revenue cliff” refers to the sharp drop in profitability of miners typically caused by a combination of decreased block rewards and/or significant drops in Bitcoin prices.
The analyst cited data stating that the mining giant currently produces 28-30 BTC per day, which could result in “133 days” of additional supply hitting the market. This would be paired with the amount of BTC they produce post-halving, which he estimated to be 14-15 BTC. Thielen believes other miners would follow a similar strategy and gradually liquidate their inventory.
Concluding his note, the analyst postulated that if all Bitcoin miners follow the same strategy, the market would witness “a maximum of $104 million of BTC selling per day.” This is expected to reverse the supply/demand imbalance that resulted in Bitcoin’s rally prior to the halving.
Since the start of 2024, Miners have sold significant portions of their Bitcoin holdings on multiple occasions. Most recently, in February, analysts at the Bitfinex crypto exchange reported that $577 million worth of Bitcoin moved from miners’ wallets. Furthermore, data from the on-chain analytics service CryptoQuant revealed that Bitcoin miner reserves fell by 10,233 BTC on January 17, valued at approximately $450 million.
