Although small miners made “a relatively modest profit” in October, the big players in the industry are not selling.
- On-chain data suggests that a supply shock appears to have caused the price of Bitcoin to rise over 50% in October.
- “There has been little profit-taking from long-term owners” of BTC, according to a new Kraken report.
- The miners are also stockpiling Bitcoin, which is contributing to a supply shock that fuels higher prices.
A supply shock appears to have helped BTC price appreciate more than 50% in October, a new report from Kraken Intelligence shows. Kken’s October 2021 Bitcoin On-Chain Digest, titled Shocktober, sheds some light on the Bitcoin network participants and their behavior.
The study found that alongside this month’s price rally, there has been “little profit-taking” from long-term Bitcoin holders. Coupled with Bitcoin’s limited and programmatic mining rate, it appears there has been a supply shock this month that has caused BTC to hit a new all-time high.
In addition to users who HODL their coins, Bitcoin miners also don’t sell their stacks as “miner supply points to hold more mining pools,” the report said. Although small individual miners made “a relatively modest profit,” large players in the industry are very reluctant to give up the rewards they deserve.
On the other side of the microeconomic chain, demand has only grown. Although higher prices generally lead people to offer more and less demand in broad economic activities, the Bitcoin market appears to have its own rules. The inelastic supply of BTC leads to an exploding demand as older players refuse to sell and new entrants bid the price higher.
“By confirming the uptrend and highlighting the strong demand for BTC, the excitement in the market is reflected in several metrics and indicators,” the report said. “The renewed demand for BTC becomes more and more apparent when you look at active addresses, new addresses, number of transactions, speed and other metrics.”
As users and miners alike grow in understanding of Bitcoin, the natural path is to HODL. The asymmetrical benefits of holding a programmatically scarce asset like BTC cause all market participants to abstain from selling, effectively creating a supply shock that drives prices higher over time.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
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