On-chain data shows that Dogecoin miners have been rallying lately. Here’s what this could mean for the memecoin, based on a past pattern.
The supply of Dogecoin miners has been rising for some time now
In a new insight afteron-chain analytics company Santiment has discussed the role of miners in the various cryptocurrency markets such as Bitcoin and Dogecoin. The indicator of interest here is the ‘miner supply’, which, as the name suggests, tracks the total number of tokens that the miners of a network as a whole have on their balance sheet.
When the value of this indicator increases, it means that the miners are currently receiving net deposits into their wallets. Such a trend implies that this cohort may be in a phase of accumulation. On the other hand, the metric registering a drop suggests that these chain validators are taking a net number of tokens from their balance, possibly for sales purposes.
First, here is a chart showing the trend in Bitcoin miner supply over the past year:
As visible in the chart above, miner supply and Bitcoin price have shown some correlation over the past year. As Santiment explained in the post:
When miners choose to hold their coins rather than sell, it is often a sign that they expect prices to rise, which can create positive momentum in the market. However, if they start unloading large quantities, this can put downward pressure on prices.
Recently, BTC supply from miners has risen again after previously falling to relatively low levels. So it appears that these chain validators may accumulate again, which could be bullish for the asset.
The relationship that miners show with the BTC price is similar to that of many other cryptocurrency networks. However, that is not the case with meme coins such as Dogecoin.
According to the analytics company:
If it’s a highly speculative-driven asset, you can often pick up an inverse indication between what miners are doing and where the altcoin is going price-wise compared to Bitcoin.
The inverse relationship is visible in the chart below for miners’ Dogecoin supply.
The chart shows that the Dogecoin supply from miners had fallen in January, but what followed this sell-off from the miners was a sharp increase in the DOGE/BTC ratio.
In recent months, the asset’s chain validators have seen their supply increase rapidly. However, given the inverse relationship that the benchmark and price typically follow, this accumulation could be a bearish sign for the asset.
DOGE Award
Dogecoin had previously recovered above $0.107, but the memecoin has since gone downhill and is back at $0.100.