- Bitcoin mining activity showed a rise in unrealized profits, indicating bullish optimism
- A few key bullish signals can help determine how BTC is doing on the price charts
Miner activity is a vital part of the Bitcoin ecosystem and as such, changes in its dynamics can provide critical market insights. Bitcoin miner data collected over the past few months can provide a rough idea of the prevailing sentiment and level of trust.
In fact, a recent one miner analysis on CryptoQuant revealed that Bitcoin miner inflows to exchanges have dropped significantly since April 2024. This observation suggested that miners have been holding more BTC in hopes of selling it at higher prices.
The same analysis showed that net unrealized profit and loss figures were still positive at the time of writing. This seemed to be confirmation that Bitcoin miners are still sitting on unrealized profits and thus not contributing much to the selling pressure in the market.
Do Bitcoin Miners Still Expect Profits?
The above observation seemed to be consistent with the Miner Position Index (MPI). A high MPI indicates that miners are transferring more BTC, which often translates into more selling pressure.
The last peak of this indicator was on November 12, just a few weeks before the price reached its historical peak.
Source: CryptoQuant
The MPI spike confirmed strong selling pressure from Bitcoin miners. Since then, however, the price has fallen significantly, closing near all-time lows in December – a sign that the outflow of miners has cooled significantly.
Despite this, Bitcoin miners’ reserves have declined and were hovering close to twelve-month lows at the time of observation. For context, there were just over 1.838 million Bitcoin miner reserves at the beginning of 2024. That figure has since dropped to 1.807 million BTC.
Source: CryptoQuant
Declining miner reserves confirmed that miners are still making some profit, especially as the price rises. This is an expected outcome, as miners still need to cash out some of their coins to cover the costs of operations.
The MPI confirmed that selling pressure has eased as the market retreated. In other words, Bitcoin miners can hold on to some of their coins in anticipation of higher prices in 2025.
There have been increases in mining reserves over time and the next big increase could cause another spike. Here it is worth noting that another important indicator to pay attention to is institutional demand. ETFs typically lead the way when demand is strong.
ETF flows were largely negative in the second half of December and started the first two days of 2025 negative. However, ETF flows turned positive again on Friday, with a huge $908.1 million acquired. Sustained demand in the coming weeks could potentially pave the way for a $100,000 price increase.