Last week, bitcoin endured a double-digit loss as the largest cryptocurrency flirted with wiping out nearly all of its post-presidential election gains. Laboring around $84,500 at this writing, bitcoin would need to gain 22.37% to reclaim its all-time high, confirming it’s in a bear market.
Predictably, the bearishness permeating the cryptocurrency space is weighing on mining equities and exchange traded funds such as the CoinShares Valkyrie Bitcoin Miners ETF (WGMI ). That makes sense, because ETFs such as WGMI and their holdings are crypto-correlated. However, an interesting scenario is playing out.
In past bitcoin bear markets, it was common for miners, including some calling WGMI home today, to liquidate holdings of the digital currency. However, this time is different. Really, it is. Data confirms that although bitcoin has plunged in recent weeks, miners aren’t rushing to sell their holdings. Broadly speaking, crypto miners, including some WGMI member firms, are standing pat.
Encouraging Signs for WGMI Holdings
In what could be a sign that bitcoin miners expected the digital currency’s price to rebound, which it did modestly last Friday, WGMI holdings aren’t panic-selling. They’re not really selling at all.
“The Miner Reserve is not changing nominally from December 2024. As soon as the Bitcoin price increased, miners sold significantly. That was obvious! But since last December, after Bitcoin hit its ATL according to Bitcoin Miner Withdrawing Addresses, we can see that the withdrawal transactions have been stopped and even decreased,” according to Crypto Quant.
That report also suggests that some miners, though not specified, used bitcoin’s pullback to add to their holdings. Think of it along the lines of a company buying its own stock following a significant decline.
“Miner Reserves are not affected significantly. It seems they are gathering their Bitcoin. In general, that is happening in the downtrends of the crypto market,” added Crypto Quant.
A separate Crypto Quant report highlights another issue that could be positive for miners and WGMI holdings. Recent data indicates the Coinbase Advanced platform, which is used by professional investors, has experienced outflows. That means some high-level market participants may be putting cash to work in cryptocurrencies.
“These large outflows typically suggest accumulation by institutions or large investors, potentially signaling bullish sentiment,” noted analyst Amr Taha. “ETF-related movements: If tied to Bitcoin ETFs, this could mean significant underlying demand. If this aligns with increased spot demand or ETF inflows, it could reinforce a supply squeeze narrative.”
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