While the shares of crypto-mining companies have enjoyed a respite in recent weeks, they are still deep in the red this year. The miners had to shift from their Bitcoin-hoarding positions and sell coins as they struggled to repay debt and cover operational costs in the recent quarter. That continued into the third quarter.

“Public miners are still dumping their Bitcoin holdings at a higher rate than their production rate,” Jarand Mellerud, an analyst at Arcane Crypto, wrote in a research note. “Public miners sold 6,200 coins in July, making July the second highest BTC selling month in 2022.”

Eoin Treacy's view

The primary argument for supporting bull markets in crypto is limited supply. The really big bullish trends have then coincided with surging demand, fuelled by massive increases in money supply.

At present money supply is tightening up. Central banks are raising rates, quantitative tightening is accelerating and money supply growth peaked 18 months ago.

The bear market in crypto prices means miners are selling rather than hoarding tokens. That’s not a great recipe for tokens even with the excitement about ethereum’s merge project reaching fruition.
Whatever, about the long-term prospect of the sector, the price action in cryptocurrencies is a liquidity barometer. The recent weakness in bitcoin prices, in particular, supports the view the short covering rally that began in July is looking tired.