Bitcoin has now dropped below the $27,000 level as on-chain data shows that the miners may have sold the asset recently.
Bitcoin Miner Reserve recently took a sharp plunge
As noted by an analyst in a CryptoQuant after, miners have withdrawn approximately 1,750 BTC from their wallets in the past day. The relevant indicator here is the “miner outflow”, which measures the total amount of Bitcoin that miners are currently withdrawing from their wallets.
The counterpart of the outflow is called the “inflow” and of course tracks the total number of coins going to the addresses of these blockchain validators.
Here is a chart showing the trend in Bitcoin miner outflows and inflows over the past few weeks:
Looks like the value of the outflow has been pretty high in recent days | Source: CryptoQuant
Whenever the miner influx has a high value, it means that this cohort is depositing a large amount of Bitcoin into their wallets. Such a trend, if extended, could be a sign that miners are currently piling up. This, of course, could have bullish implications for the price.
In contrast, when outflows are high, it suggests that a large portion of the asset is coming from the miners’ stock. In general, the main reason why these holders withdraw their coins from their wallets is sales-related purposes, so this kind of trend could be bearish for the value of the cryptocurrency.
The chart above shows that miner inflows were relatively low over the past day, implying that these investors are not depositing significant amounts of money into their wallets.
However, the outflow of miners registered quite a high peak during the same period. In total, about 1,750 BTC ($47 million) has left the miners’ supply with this rise in the indicator.
Since there has been no inflow to counter these outflows, a net amount of the asset has now left the miners’ wallets. This would mean that if the outflow were for selling purposes, a net bearish effect on the price should appear.
An indicator that helps to better identify whether these transfers were for sale or not is the “miner to exchange flow”, which only tracks the outflow of miners en route to centralized exchanges.
Typically, this cohort uses the exchanges when they want to participate in distribution. However, as can be seen in the chart above, the metric has remained low lately, meaning that these outflows have not gone directly into the wallets of these platforms.
However, the quant has discovered that the destination wallet of the 1,750 miner outflows made another transfer, which indeed went to an exchange. “There is a good chance that 1,750 BTC eventually went to Binance,” the analyst explains.
When this outflow happened yesterday, Bitcoin was above the USD 27,000 level. After them, however, the asset took a dive and is now below this figure, suggesting that this latest selling push from the miners may have been behind the decline.
BTC price
At the time of writing, Bitcoin is trading around $26,800, up 2% over the past week.
BTC has declined today | Source: BTCUSD on TradingView
Featured image of Brian Wangenheim on Unsplash.com, Charts from TradingView.com, CryptoQuant.com