Miner balances across wallets started the year at 1.82 million BTC and are now back to the same levels, according to on-chain data tracked by Glassnode. The amount of Bitcoin accumulated by Miners in 2022 has been surpassed by the volume sold, wiping out any increase in miner balances.
The balance of the combined Bitcoin miner wallets soared dramatically in July 2022 to hit a 2-year high in what appeared to be a recovery from the May price drop related to the collapse of Terra Luna. However, the same meltdown that resulted from the Terra Luna crash has revisited the crypto in the wake of the FTX insolvency.
The hash rate has also started declining over the past weeks, which is an indication of declining miner interest.
The net position change across all miner BTC addresses dropped to early January levels, showing that if the sell-off persisted, proof-of-work miners might see worse to come.
2022 has been a tough year for proof-of-work mining, owing to rising energy costs and plummeting bitcoin prices. As a result, miners have resorted to massive selling of their crypto holdings, creating significant net outflows.
Despite indicators pointing toward a dark period for Bitcoin miners, investors have hopes for the on-chain data signaling bottom signals for the cycle. Data shows long-term holders accumulated at high levels between August and October. While there is positive long-term sentiment toward the price of Bitcoin, there are signs of LTH selling their positions. On-chain analysis tool CryptoQuant shows long-term investors have already entered the capitulation phase.
Another potentially bullish indicator is the recent wave of migration to custodial wallets. Average cryptocurrency users are moving their balances off exchanges in light of the continued failure of centralized exchanges. While this portrays the lack of trust towards centralized exchanges, it is a positive sign that retail investors are into crypto for the long-term game.
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