Bitcoin's price decline has been exacerbated by miners selling reserves ahead of halving

"Much of the recent price falls in bitcoin, particularly following the approval of spot bitcoin ETFs by the SEC, can be attributed to selling by bitcoin miners, who used the run up in BTC as a catalyst to exit, or leverage, their positions," Bitfinex analysts said in a report on Tuesday.

The report noted that miners have been motivated to sell in preparation for this year’s upcoming halving , which will see their bitcoin rewards reduce and hence their business profitability decline.

"Selling now provides the capital for miners to upgrade infrastructure and is a reminder of the significant influence on market liquidity and price discovery that miners have," the Bitfinex analysts added.

According to the report, miner reserves of bitcoin dropped significantly shortly after spot bitcoin ETF approvals. "Last week saw the largest outflows from miner wallets ever recorded, and more selling could be imminent," the report added.

The upcoming bitcoin halving

The next bitcoin halving will likely occur in April of this year, and the event will reduce the reward that miners receive for validating and adding new blocks to the blockchain by 50%.

The halving occurs approximately every four years, or after every 210,000 blocks are mined. The last halving occurred in 2024, when the block reward was reduced from 12.5 bitcoin to 6.25 bitcoin.

The next halving will occur after the mining of approximately 840,000 blocks, leading to a further reduction in the block reward, from the current 6.25 BTC to 3.125 BTC per block. This mechanism is programmed into the bitcoin protocol and is intended to control the supply of new bitcoins, making it more scarce over time.

The world's largest cryptocurrency by market capitalization decreased by over 1% in the past 24 hours to $42,920 at 8:34 a.m. ET, according to The Block's Price Page .

The price of bitcoin fell on Tuesday by over 1%. Image: The Block.