On-chain data shows that Bitcoin miners have continued to sell recently, a sign that could be bearish for the cryptocurrency’s price.
Bitcoin Miner Reserve has been falling since the start of the rally
As an analyst in a CryptoQuant after pointed out that BTC miners have been continuing to shave coins off their reserve lately. The “miner reserve” is an indicator that measures the total amount of Bitcoin that all miners currently hold in their wallets.
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When the value of this statistic increases, it means that the miners are depositing a net number of coins in their wallets. This trend suggests that these blockchain validators are collecting the cryptocurrency. Since miners are often a source of selling pressure in the market, holding and adding to their supply can be bullish for the price.
On the other hand, a falling value in this indicator implies that miners are transferring some BTC from their reserve. Since one of the main reasons why these investors pull out of their wallets is sales-related purposes, such a trend can have bearish consequences for the value of the asset.
Now, here is a chart showing the Bitcoin miner reserve trend over the past year:
The value of the metric seems to have gone down in recent days | Source: CryptoQuant
The chart above shows that the Bitcoin miner reserve saw a sharp plunge just as the rally started in January, suggesting that these investors sold to take advantage of the opportunity to take profits. The drop in the metric was also quite sharp in this case, surpassing the levels seen during the FTX crash last November.
The miner’s reserve has only moved sideways or down since this sell-off, suggesting that these holders have not participated in any accumulation in recent months; they have only looked for opportunities to leave.
When Bitcoin recently plunged from the $30,000 mark, the indicator saw another sharp drop, meaning this cohort was once again selling their BTC.
The drop in the indicator has also continued due to the volatile price action seen over the past few days, suggesting that BTC miners are still selling their coins.
While these investors have recently sold a net amount of coins, the actual size of their sales is not that significant compared to their total reserve (they currently hold over 1.82 million BTC in their wallets).
However, the quant notes that the miners holding their coins for longer periods of time could be one of the crucial factors in the health of the bullish trend.
It now remains to be seen if these holders can quickly reverse the trend or if they will continue to sell Bitcoin in the short term. Both possibilities are likely to have a profound effect on the BTC price.
BTC price
At the time of writing, Bitcoin is trading around $28,100, up 3% over the past week.
Looks like the value of the asset has plunged in the last day | Source: BTCUSD on TradingView
Featured image of Becca on Unsplash.com, charts from TradingView.com, CryptoQuant.com