Bitcoin miners selling cryptocurrency may keep pressuring token's price: JPMorgan

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Bitcoin miners needing to sell could weigh on the token’s price for some time, according to JPMorgan Chase & Co. Bitcoin miners have been forced to tap into their cryptocurrency stashes as a plunge in prices, rising energy costs and increased competition bite into profitability.

The number of coins miners are sending to crypto exchanges has been steadily climbing since June 7, researchers at MacroHive noted, in a sign that "miners have been increasingly liquidating their coins on exchanges." Several publicly listed bitcoin miners collectively sold more than 100% of their entire output in May as the value of bitcoin tumbled 45%, an analysis by Arcane Research.

Public-listed miners, which account for about 20% of the total, have already reported Bitcoin sales in May and June to increase liquidity, meet costs and possibly deleverage, JPMorgan strategists said in a note. 

Privately-held miners may have sold a larger share of their block rewards from mining activity to meet ongoing costs and could be less levered given their more limited access to capital markets, they said.

“Offloading of Bitcoins by miners, in order to meet ongoing costs or to delever, could continue into Q3 if their profitability fails to improve," the strategists wrote. That offloading “has likely already weighed on prices in May and June, though there is a risk that this pressure could continue."

Cryptocurrencies have suffered this year amid Federal Reserve rate hikes and stubbornly high inflation. The collapse of the Terra/Luna ecosystem and continued concern about hedge fund Three Arrows Capital Ltd. have further rattled investors.

One thing that could mitigate price pressures, according to JPMorgan, is a drop in the cost of production from a range of