Understanding the HODL Trend: Why Bitcoin (BTC) Miners are Holding onto Their Coins

• Amid a fall in their revenue, Bitcoin miners have refused to let go of their holdings.
• Bitcoin’s miner revenue has fallen to its lowest in the last year.
• This is due to the recent decline in network activity.

Bitcoin miners are holding onto their assets despite a significant drop in revenue, indicating a strong belief in the cryptocurrency’s future potential.

Bitcoin Miners Hold On Despite Revenue Drop

According to Bitcoin’s [BTC] Miner Position Index [MPI], the leading cryptocurrency is currently at its longest period of reduced miner sell pressure after a halving event. This information was found in a new report by pseudonymous CryptoQuant analyst Papi. The MPI measures the ratio of the coin’s total miner outflow in US dollars to its one-year moving average of total miner outflow, also valued in dollars. When it rises, it indicates that miners are selling more of their holdings. Conversely, when it declines, it suggests they are holding onto their assets or accumulating more.

Analysis of Bitcoin’s MPI and Puell Multiple

As per CryptoQuant data, BTC’s MPI was -0.23 as of this writing. After peaking at a year-to-date (YTD) high of 9.43 on the 8th of January, the metric has since declined by over 100%. In addition to a falling MPI, BTC’s Puell Multiple has also cratered, causing miner revenue to fall to its lowest level in a year. The Puell Multiple tracks miner profitability by measuring the daily issuance of new coins (block rewards) in relation to its 365-day moving average. When the metric’s value is high, it is interpreted to mean that miners are generating revenue in relation to the historical average. Conversely, when the metric witnesses a decline, miners’ revenue is low compared to the historical average.

Impact of Network Activity on Miner Revenue

Following the Bitcoin halving event, there was a surge in average transaction fees on the network due to a spike in activity around Runes. However, as the hype around the protocol begins to wane, the transaction count on the network has plummeted, impacting network fees. This decline in network activity has led to a decrease in the percentage of miner revenue derived from network fees. As of the 20th of April, miners derived 74% of their revenue from network fees. However, this has been reduced to 22% as of the 5th of May.

Conclusion

Despite the fall in revenue, Bitcoin miners are not selling their holdings. This suggests a strong belief in the future potential of the cryptocurrency. As the network activity normalizes and the hype around the protocol subsides, it will be interesting to see how this impacts miner behavior and the overall market dynamics of Bitcoin.