In a few long days, MOSP (Miner Output Selling Pressure) is going to see the largest drop in all of Bitcoin’s short history, from half a billion per month, to a mere quarter billion.
|Halving Date||BTC/USD||Daily BTC produced||Price of BTC produced Monthly Before Halving||Monthly MOSP After Halving|
|May 2020||$9,300||1,800 to 900||$502,200,000||$251,100,000|
|July 2016||$250||3,600 to 1,800||$70,200,000||$35,100,000|
|Nov 2012||$12||7,200 to 3,600||$2,592,000||$1,296,000|
Miner output has become the most consistent selling pressure in the Bitcoin ecosystem as the prices shot through the roof since the last halving. The expensive operational cost of producing Bitcoin has pushed miners to consistently sell the vast majority of their block rewards in order to just keep their operations going with razor thin margins.
Today, the $500,000,000+ of miner output selling pressure is easily eaten up by buyers looking to score Bitcoin. This is considered new money in as that coin is sold for the most part to investment funds and hodlers on exchanges. There are many cases where the Bitcoin is even sold OTC at a premium direction from miners in the form of ‘virgin’ Bitcoin.
Most of the 150MM Monthly Bitcoin Exchange Volume is Fake, or Economically Insignificant
You may be thinking that half a billion in monthly Bitcoin selling pressure is a drop in the bucket compared to 1.39T 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.
How far will the Bitcoin Price climb due to the MOSP Reduction?
It’s hard to say for sure, but the epic 2019 rally was kicked off with a somewhat incognito purchase of $100 million worth of Bitcoin, leading to a massive buyer FOMO pushing the price past $13K.
Every 12 days we’ll see that kind of buying pressure unmet by miner output, which will lead to an injection of $3 Billion worth of new money in over the next year. The real question is will this be enough to trigger a FOMO reaction from retail investors similar to the ones in late 2017 and mid 2019 causing a further escalation of prices and popularity.
Why didn’t the previous Halvings Cause an Immediate price rise?
Previously MOSP wasn’t as important. Throughout Bitcoin’s short history, miners have traditionally been the largest Bitcoin believers – now they are acting like the most ardent skeptics in an economical sense, because they are selling almost immediately instead of holding.
The difference is that during the last two halvings mining was simply easier, and not nearly as expensive. Most miners were doing so on their laptops or on what is not considered oldgen technology that isn’t nearly profitable to run today (unless the electricity is free, or super cheap) – In the most extreme example possible, the 1 million + Bitcoin that was first mined has still never been sold!
In order to mine Bitcoin today, a miner has to plan thoroughly and carefully watch the Bitcoin price to make sure that running their rigs is profitable. In the extreme swing cause by the Black Thursday crash, many miners turned off their machines at the same time, leading to a historic difficulty adjustment that we’ve since recovered from.