Last week, Ethereum miners who worked for rewards accumulated about $341 million on the network.
Now, a week after the Confluence, analysts are warning that accumulated values could be a source of bearish pressure over the past month.
“Miners dumping their ETH predict a financial downturn that we will have to overcome in the coming months to resume growth, but it will happen,” Lucas Campbell, editor of the Bankless newsletter, wrote on Monday.
Ethereum miners dumped over 16,000 ETH from September 12 to September 19 (the merger went into effect on September 15). Lucas Outumuro, head of investigation at IntoTheBlock, attributed the drop in balances to “miners moving to other networks.” He stated that they are “profiting from their ETH holdings.”
It is also likely that some miners sent a certain amount of Ether to exchanges to manage the “airdrop” of new tokens from a small blockchain that pretended to continue the proof-of-work system. Since then, these efforts have largely fizzled out.
The price of Ethereum surged in the weeks leading up to the merger as some traders also wanted to profit from the giveaway, but others suggested that the change could lead to more institutional investment.
When the Merger did happen, the price of the cryptocurrency suddenly plummeted, in what analysts called the “buy the rumor, sell the news” market reaction.
The sell-off also coincided with the lead up to this week’s Federal Reserve meeting, which included the promise of aggressive monetary policy putting pressure on risky asset prices lower.
“If miners were hoarding Ethereum for profit or to pay their electricity bill, they were encouraged to sell those profits, especially given the expected and actual increase in volatility,” commented Alexander Lores, director of blockchain market research firm Quantum.
“For the first time, these miners have no future business relationship with Ethereum,” Lores said.
Now the new network relies on “stakers,” investors who help secure the blockchain through the process of “staking” their Ether, and leaving behind the Proof of Work mining mechanism that uses so much power.
Former Ethereum miners who decide to continue mining based on the PoW mechanism can switch to another chain. Related altcoin prices have risen significantly, with Ravencoin (RVN) up 64% and Ethereum Classic up 75% over the past 90 days.