Bitcoin miners don’t seem to sell or care about price, is this bullish?
Data from CryptoQuant suggests that Bitcoin miners may not care about price after all and all the fear, uncertainty and doubt (FUD) of the past few days.
Bitcoin miners do not sell
According to CryptoQuant’s Miners’ Position Index (MPI)a ratio of the total miners’ BTC outflows to the 365-day moving average of the same reading, Bitcoin miners have not sent their coins to external addresses, usually exchanges.
At the time of writing on March 8, the Bitcoin MPI stood at -0.57, down from +2.52 on March 1.
Often MPI fluctuates, rising and falling depending on coin flow. MPI increases when miners are aggressive, sending their coins to exchanges in bulk.
As observed over time, this activity precedes a price drop whose effects reverberate across the crypto scene. In recent days, however, the MPI has been declining. This could mean that miners have been looking at the pages, holding on to their coins, and not plunging into the FUD spewed by bears recently.
Bitcoin miners are critical to the security of the blockchain infrastructure. They are rewarded for their participation in validating transactions on the network. Most miners liquidate their BTC rewards to cover operating expenses.
Sentiment improves
Current feeling indicates that Bitcoin traders. According to the Bitcoin Fear and Greed index, the prevailing sentiment is “neutral”, an improvement over the months, significantly as BTC fell after the collapse of FTX, a crypto exchange and several CeFi platforms in the second half of 2022.
Bitcoin remains under pressure to spot rates, slipping during the consolidation early this month. It is within a bear formation, with the bearish engulfing bar from March 3 defining the short-term trend. Assuming prices trade below the $23,000 level, or February highs of around $25,000; sellers have a great chance to push prices down and continue the trend set in motion by the March 3 bar.
Traders are wary, considering the technical candlestick arrangement and the high probability of a BTC cooling after extensions in the first part of Q1 2023.
However, the price drop in the first days of March does not scare miners, most of whom are considered whales, to sell their holdings. Declining MPI may indicate that, after headwinds in the better part of 2022, miners are liquid enough to cover operating expenses, including maintenance, upgrades to new efficient rigs and electricity costs associated with cooling.
By “HODLing”, Bitcoin miners seem confident about what lies ahead. Subsequently, this could contribute to stable prices and overly improve crypto sentiment considering Bitcoin’s market share and positive correlation with altcoins.
Feature image from Canva, chart from trade display
