Bitcoin Bearish Signal: Miners Continue to Sell
On-chain data shows that Bitcoin miners have continued to sell recently, a sign that could be bearish for the price of the cryptocurrency.
Bitcoin Miner Reserve has been declining since the rally started
As an analyst in a CryptoQuant post pointed out, BTC miners have continued to shave coins off their reserve recently. The “miner reserve” is an indicator that measures the total amount of Bitcoin that all miners currently have in their wallets.
Related reading: Bitcoin emerges as king of assets, 10X growth over gold during US banking crisis
When the value of this metric goes up, it means that the miners are depositing a net number of coins into the wallet. This trend suggests that these blockchain validators are accumulating the cryptocurrency. As miners are often a source of selling pressure in the market, holding on and increasing supply can be bullish for the price.
On the other hand, a decreasing value in this indicator implies that miners are transferring some BTC out of the reserve. Since one of the main reasons these investors may withdraw from their wallets is for sales-related purposes, such a trend could have bearish implications for the asset’s value.
Now, here is a chart showing the trend of the Bitcoin mining reserve over the past year:
The value of the metric seems to have gone down in recent days | Source: CryptoQuant
The graph above shows that the Bitcoin mining reserve saw a sharp drop just as the rally started in January, suggesting that these investors sold to take advantage of the profit-taking opportunity. The drawdown in the metric was also quite sharp in this case, surpassing the levels seen during the FTX crash last November.
The mining reserve has only moved sideways or down since this sale, suggesting that these holders have not engaged in any accumulation in recent months; they have only looked at chances to quit.
Recently, when Bitcoin plunged from the $30,000 mark, the indicator again saw a sharp leg down, meaning that this group once again sold their BTC.
The pullback in the indicator has also continued through the volatile price action observed in recent days, suggesting that BTC miners are still dumping their coins.
Although these investors may have sold a net amount of coins recently, the actual volume of their sales is not that significant compared to their total reserve (they currently have upwards of 1.82 million BTC in their wallets).
However, Quant notes that miners holding on to their coins for longer periods of time may be one of the determining factors in the bullish trend’s health.
It now remains to be seen if these holders can reverse the trend anytime soon or if they will continue selling Bitcoin in the short term. Either possibility is likely to have a profound effect on the BTC price.
BTC price
At the time of writing, Bitcoin is trading around $28,100, up 3% in the last week.
Looks like the value of the asset has plunged in the last day | Source: BTCUSD on TradingView
Featured image from Becca at Unsplash.com, Charts from TradingView.com, CryptoQuant.com
