On-chain data shows that Bitcoin miner outflows have increased, suggesting that the sale of this cohort may be behind the cryptocurrency’s drop to $20,700.
Bitcoin Miner outflows have recently registered multiple spikes
As noted by an analyst in a CryptoQuant after, on Wednesday, miners deposited 669 BTC on exchanges. A relevant indicator here is the “miners’ reserve”, which measures the total amount of Bitcoin that miners as a whole currently have in their wallets.
The “miners outflowis a statistic that tells us the total number of coins these blockchain validators are currently transferring from the miner reserve. Naturally, the value of the reserve falls when the outflows register a peak, since an equal or greater portion of the crypto is not flowing in at the same time.
Generally, miners extract BTC from their reserve for selling purposes. So when the outflows register high values (or if the reserve sees a steep decline), it means that this cohort may be participating in large volumes of sales right now.
Now, here is a chart showing the trend in Bitcoin miner outflow and miner reserve over the past few months:
The value of the reserve seems to have observed significant decline in recent days | Source: CryptoQuant
As shown in the chart above, Bitcoin miner outflows saw two very large spikes in the past few days. The peak on January 14 was around 4,089 BTC, while the one on January 17 was at 2,500 BTC.
At the same time as this outflow, their reserves also plummeted, so there wasn’t much incoming volume to compensate for this outflow. There was also a third peak on Wednesday, but it was significantly smaller than the other two.
However, there was something else about this outflow that is worth paying attention to. About 669 BTC of this outflow went to centralized exchanges. This can be seen in the data for the “miner to exchange power” metric, which is also displayed in the chart.
Usually, exchanges are what investors use to quickly swap their Bitcoin for altcoins or stablecoins, or simply retire to fiat. While miner outflows alone may be a sign of some selling (since these holders may simply be using over-the-counter (OTC) deals rather than exchanges), direct deposits to exchanges provide more evidence that selling may be the intent. are behind the outflow.
While some of the third outflow went to the exchanges, the first two larger spikes did not seem to coincide with significant deposits to these platforms.
Nevertheless, the fact remains that after the first two outflows, the Bitcoin rally slowed to a crawl, and after the third (which headed towards exchanges), BTC flatly fell, reaching $20,700. This could suggest that miner sales played a role in these developments in the asset’s price.
BTC price
At the time of writing, Bitcoin is trading around $20,700, up 14% over the past week.
Looks like BTC has plunged in the past day | Source: BTCUSD on TradingView
Featured image of Jievani Weerasinghe on Unsplash.com, charts from TradingView.com, CryptoQuant.com