Miner selling pressure is by far the most consistent type of selling pressure in the Bitcoin ecosystem, and with each halving we see a huge reduction in this key Bitcoin metric. The drop in monthly MOSP we’re going to see when the Halving occurs in a few short days is going to be around $270,000,000 if the price stays consistent at $10K through the halving.
The MOSP metric assumes that all Bitcoin that is mined is sold immediately by miners, which is a far cry from how things actually happen, as the most efficient miners do hold treasuries and look for the best opportunities to sell, but in reality mining is very expensive and more and more miners are being forced to sell their block rewards as they earn them just to cover the costs of their expensive operations.
|Halving Date||BTC/USD||Daily BTC produced||Monthly MOSP After each Halving||Price of BTC output Monthly Before Halving|
|May 2020||$10,000||1,800 to 900||$270,000,000|
(900 BTC * 30)
(1,800 BTC * 30)
|July 2016||$250||3,600 to 1,800||$35,100,000|
(1,800 BTC * 30)
(3,600 BTC * 30)
|Nov 2012||$12||7,200 to 3,600||$1,296,000|
(3,600 BTC * 30)
(7,200 BTC * 30)
MOSP is more relevant with the 2020 halving then it ever was previously. With the 2016 and 2012 halvings, most miners weren’t selling their Bitcoin immediately upon earning it because mining was simply cheaper. There are cases where miners even forgot about and threw away massive amounts of Bitcoin. In the most famous example ever, the first million Bitcoin to ever be mined has never moved.
Gold has a monthly MOSP of over $13 Billion
On average 8,000,000 ounces of gold are mined per month, and at gold’s current price of $1,700 per ounce, that comes out to around $13,600,000,000 per month.
While Bitcoin’s MOSP sees massive reductions every four years, gold’s MOSP should pretty much stay consistent and see less wild swings, save an industry challenging pandemic that stops everyone from mining gold.
If Bitcoin ever does start chipping away at gold’s reign of the earth’s more trusted store of value, we should see some of gold’s massive MOSP come down proportionally to the market share that Bitcoin steals away.
Most Of The 150MM Monthly Bitcoin Exchange Volume Is Fake, Or Economically Insignificant
You may be thinking that half a billion in monthly MOSP is a drop in the bucket compared to 1.39T in monthly Bitcoin volume, but most of that volume doesn’t mean much in terms of moving the price.
If an algorithm buys 1BTC and sells it after at $2 move up or down, this is logged as 2BTC in volume, but really does nothing economically for Bitcoin as a whole. The only thing that matters is new money in, and old money out. Miner output selling pressure is constantly eating away at that new money in because it’s selling bitcoin that did not exist previously. Any reduction in miner output selling pressure should lead to a price rise if all else stays consistent.
Furthermore, 95% of exchange volume is faked in order to receive more media attention and facilitate higher fees for ICOs. They are faking the volume by moving the Bitcoin back and forth in transactions that are economically insignificant.
Coronavirus Economic Backdrop Is Exactly What Bitcoin Was Built For
Atrillion here, a trillion there. We’re devaluing fiat currencies around the globe faster than you can say ‘hyperinflation’ and buyers are having legitimate issues purchasing gold. People honestly don’t even want to hand each other cash anymore cause the bills are likely laden with Covid-19 droplets.
In the United States alone, trillions of dollars have been created in stimulus efforts to mitigate the looming economic threat which decisively ended wall street’s longest bull run in history. Germany is boasting unlimited cash and the European Central Bank isn’t backing away from this fight either, as Christine Lagarde pledges a 750 billion euro commitment. All of this money being created devalues the rest of it in circulation, bringing to light Bitcoin’s provable scarcity principle.
The general population currently doesn’t understand why creating money at this pace is alarming economists, but when the signs of inflation start to show, wall street and main street will be seeking alternative ways to store their wealth.
Furthermore, Bitcoin is sitting dry powder – One major factor that moves the price of Bitcoin upwards is the price of Bitcoin moving upwards. The bull market that saw Bitcoin reach $20K in 2017 happened quickly, and it was mostly driven by FOMO. Once we cross $20K again it’s going to be a quick ride up with clear skies ahead. The current economic backdrop is exactly the spark that Bitcoin needs to explode.
Bitcoin Just Got A Taste Of The Worst Case Scenario
Years from now when talking about Bitcoin it will be hard not to mention the historic Coronavirus sell off (or Black Thursday) and the halving in the same breath as they are happening within a couple months of each other.
Bitcoin did well in dealing with the Coronavirus sell off which saw the price tumble 52% and more on some exchanges, leading to a historically significant difficulty adjustment. There has been an immediate and consistent uptrend since the crash and at this point the price and key metrics have all recovered very nicely. The hashrate is continuing to challenge the all time high and transactions are showing a consistent and strong upwards trend to previous levels.
In as few words as possible, the state of the network is strong.
Some nightmare scenarios that bears are considering are a decrease in security due to miner capitulation post halving and a large sell off by weak hands causing the price to tumble below the $3K super support. The truth is that there are only strong hands left after the massive sell off sparked by the Coronavirus, anyone with Bitcoin after March 12th, 2020 is likely not selling it, even if it goes down to zero. The bottom is in.
As for the miner capitulation, this will certainly happen as the block rewards get halved, and only the more efficient operations will continue to exist. However, this won’t lead to a decrease in security as the new generation of mining hardware is simply much more powerful, and it’s being purchased faster than companies can produce it.
The Antminer S17, for instance, has a hashrate of 53Th/s which is approximately half as fast as the Antminer S19 (scheduled for delivery last this month.) Every iteration of these rigs prove more powerful and they add a significant benefit to the hashrate, they also require less electricity (so they can be ran in more places) and for the most part run a bit more quiet than their predecessors.
One great side effect of this is mining moving away from China which is mostly full of old generation mining rigs that will certainly have to shut off after the halving as they will become unprofitable to run. Even power plants are starting to mine Bitcoin and other operations that have surplus electricity are starting to get involved – this will ensure that there will always be enough hashrate to secure the network from bad actors.