This $319 million treasure trove of Ethereum miners hovering in the post-merger market. – Mag Mirror

In the years and months leading up to the Ethereum blockchain’s historic switch to a more energy-efficient system last week, data miners working for rewards on the network had racked up nearly $341 million. cryptocurrency ether (ETH).

Today, a week after the merger, cryptocurrency analysts are warning that miners selling their stocks could become a source of short-term downward pressure on the price of the cryptocurrency, as the market has already fallen 19% in the past month.

“Miners dumping their ETH are an overhang that we will need to overcome over the next few months to resume the bullish mode of operation, but it will happen,” Bankless newsletter editor Lucas Campbell wrote on Monday.

On-chain data shows that Ethereum miners dumped over 16,000 ETH from September 12-19. (OKLink)

Blockchain data collated by OKLink appears to show that miners have started selling their reserves over the past week.

Ethereum miners dumped over 16,000 ETH between September 12 and September 19. (The merger took effect on September 15.) This drop reduced the miners’ combined balance to around 245,000 ETH, or a value of around $319 million.

Lucas Outumuro, head of research at IntoTheBlock, attributed the drop in balances to “miners moving to other channels. »

They are “taking profits on their ETH holdings,” he said.

It’s also possible that some miners sent ether to exchanges in order to manage an “airdrop” of new tokens from a breakout blockchain that aimed to continue the “proof-of-work” system of the now-discontinued Ethereum blockchain, Outumuro said. This effort has since largely lost momentum.

The price of Ether soared in the weeks leading up to the merger as some traders also fought over the airdrop, while others speculated that the move could lead to higher institutional investment. But when the merger actually took place, the price of the cryptocurrency suddenly plummeted – in what analysts called a “buy the rumour, sell the fact” market reaction.

“If miners had been accumulating Ethereum at a profit, or if they need to pay their electricity bill, they would have an incentive to sell at a profit, especially with the expected and actual increased volatility,” said Alexandre Lores, director of blockchain market research at Quantum Economics.

“For the first time, these miners have no future business relationship with Ethereum,” Lores said.

It’s possible that the movement of miners contributed to the immediate post-merger price weakness, according to Jeff Dorman, chief investment officer at digital asset management firm Arca. Ether price was trading around $1,300 on Thursday.

It is not certain that all miners will liquidate their holdings, Dorman said.

“Perhaps some [mineurs] will turn into speculators and hang on for a better price,” Dorman said. “Maybe some will turn into stakers and secure the new network, but this activity [de minage] is finished. The new network relies on “stakers” – investors who help secure the blockchain by “staking” their ether – instead of the energy-intensive “proof-of-work” mining that Ethereum used to use previously.

Granted, the remaining miner holdings are only a fraction of the total ETH supply of 119 million, according to data from CoinDesk.

Former Ethereum miners who choose to continue proof-of-work mining can switch to another chain. Related altcoin prices have seen a significant increase, with Ravencoin (RVN) up 64% and Ethereum Classic’s ETC token up 75% in the past 90 days.

Chainalysis economist Ethan McMahon said he sees the sale of miners as “a temporary shift” in moving away from Ethereum, “if the original reason miners held Ethereum was for reserve of value or investment. »

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This $319 million treasure trove of Ethereum miners hovering in the post-merger market. – Mag Mirror

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