Over 16,000 ETH worth over $20 million were dumped by miners in the last week, according to on-chain statistics. The Ethereum miners still possess roughly 245,000 ETH, but they are no longer connected to the blockchain network commercially.
Now, a week after the Merge, cryptocurrency analysts are cautioning that, given the market’s 19% decline over the previous month and the miners’ sales of their hoards, the price of cryptocurrencies may soon come under downward pressure.
The Bankless newsletter’s editor, Lucas Campbell, stated on Monday that “miners selling their ETH is an overhang that we’ll have to work through over the next months in order to reinstate up-only mode, but it will happen.”
Nearly 16,000 ETH were lost by Ethereum miners between September 12 and September 19. As a result of the decline, the miners’ total holdings were reduced to 245,000 ETH, or around $319 million.
The fall in balances was ascribed by IntoTheBlock’s head of research, Lucas Outumuro, to “miners switching onto other chains.”
Outumuro said that it’s also likely that some miners transmitted some ether to exchanges to handle an “airdrop” of new tokens from a branch blockchain that attempted to go on with the now-abandoned “proof-of-work” mechanism used by the Ethereum blockchain. Since then, that endeavor has mostly failed.
Ether’s price increased in the weeks before the Merge as traders fought for the airdrop, and others projected that the shift would increase institutional investment. But when the Merge really took place, the price of the cryptocurrency suddenly plunged in what analysts dubbed a “buy-the-rumor, sell-the-fact” market reaction.
The expected and actual higher volatility would encourage miners to sell at a profit, according to Alexandre Lores, head of blockchain market research at Quantum Economics. “If miners have profitably accumulated Ethereum, or if they must pay their electricity bill.”
According to Jeff Dorman, a chief investment officer of digital-asset management company Arca, it’s plausible that the miners’ action may have contributed to the rapid dip in prices post-Merge.
Maybe some [miners] may become speculators and hang on for a higher price, according to Dorman. Perhaps some will become stalkers and protect the new network, but the mining industry is no longer viable. Instead of the energy-intensive “proof-of-work” mining that Ethereum previously utilized, the new network depends on “stakers,” or investors who “stake” their ether to help protect the blockchain.
Indeed, according to CoinDesk statistics, the remaining miner holdings only make up a small portion of the entire 119 million ETH supply.
If former Ethereum miners desire to continue proof-of-work mining, they can migrate to another chain. Over the past 90 days, the value of associated cryptocurrencies has surged dramatically, with Ravencoin (RVN) increasing by 64% and Ethereum Classic’s ETC token increasing by 75%.
