Bitcoin has now dipped below the $27,000 level as on-chain data shows the miners have possibly been selling the asset recently.
Bitcoin Miner Reserve Has Taken A Sharp Plummet Recently
As pointed out by an analyst in a CryptoQuant post, miners have taken out about 1,750 BTC from their wallets during the past day. The relevant indicator here is the “miner outflow,” which measures the total amount of Bitcoin that miners are transferring out of their wallets currently.
The counterpart metric of the outflow is called the “inflow,” and it naturally tracks the total number of coins going into the addresses of these blockchain validators.
Here is a chart that shows the trend in the Bitcoin miner outflow, as well as the inflow, over the last few weeks:Looks like the value of the outflow has been pretty high in recent days | Source: CryptoQuant
Whenever the miner inflow has a high value, it means that this cohort is depositing a large amount of Bitcoin into their wallets. Such a trend, when prolonged, can be a sign that the miners are accumulating right now. Naturally, this can have bullish implications for the price.
When the outflow is high, on the other hand, it suggests that a large amount of the asset is exiting from the supply of the miners. Generally, the main reason why these holders transfer their coins out of their wallets is for selling-related purposes, so this kind of trend can be bearish for the cryptocurrency’s value.
In the above graph, it’s visible that the miner inflow has been at relatively low values during the past day, implying that these investors aren’t depositing any significant amounts to their wallets.
The miner outflow, however, has registered a pretty high spike in the same period. In total, around 1,750 BTC ($47 million) has exited the supply of the miners with this surge in the indicator.
Since there haven’t been any inflows to counteract these outflows, a net amount of the asset has now left the miners’ wallets. This would mean that if the outflows were made for selling purposes, a net bearish effect should appear on the price.
An indicator that helps better identify whether these transfers were for selling or not is the “miner to exchange flow,” which tracks only the miner outflows heading towards centralized exchanges.
Usually, this cohort uses the exchanges when they want to take part in distribution. As shown in the above chart, however, the metric has remained low recently, meaning that these outflows haven’t directly entered into the wallets of these platforms.
Though, the quant has discovered that the destination wallet of the 1,750 miner outflow made another transfer, which was indeed towards an exchange. “There is a high probability that 1,750 BTC ultimately went to Binance,” explains the analyst.
When these outflows took place yesterday, Bitcoin was above the $27,000 level. Following them, however, the asset has observed a plunge and is now below this mark, suggesting that this latest selling pressure from the miners may have been behind the decline.
At the time of writing, Bitcoin is trading around $26,800, up 2% in the last week.BTC has declined today | Source: BTCUSD on TradingView
Featured image from Brian Wangenheim on Unsplash.com, charts from TradingView.com, CryptoQuant.com