On-chain data shows that the Bitcoin miner’s selling power has dropped recently, a sign that could be positive for the price of the crypto.
Bitcoin Miner’s selling power has plummeted in recent days
As noted by an analyst in a CryptoQuant after, there has been less selling pressure from the miners lately. There are two relevant indicators here, miner supply and miner outflow. The first of these, the miner supplyis simply a measure of the total amount of Bitcoin currently in miners’ wallets.
The other, the miners outflow, is a statistic that tracks the total number of coins miners are currently extracting from their stash. Now “miner selling power” is defined as this miner outflow divided by miner supply (30-day moving average, log-scaled).
When the value of this indicator is high, it means that miners are currently transferring large amounts compared to their total supply. Since miners usually use their BTC for dumping purposes, this trend could be bearish for the cryptocurrency’s value. On the other hand, low values suggest that miners are currently spending relatively little money.
The chart below shows the trend in the Bitcoin miner’s selling power over the past few years:
The value of the metric seems to have taken a plunge in recent days | Source: CryptoQuant
As the chart above shows, when the Bitcoin miner’s selling power has reached high values and reached a local peak, the price of the crypto has been on a downward trend. This trend makes sense, as highs in the stat indicate increased selling pressure from these chain validators.
Recently, the indicator showed such a formation again, and BTC also reacted with a decline this time as the price moved from over USD 18,000 to its current level of USD 16,000. However, since this recent peak, the miner’s selling power has declined rapidly and has now reached a new low.
This muted selling pressure from miners isn’t necessarily bullish in and of itself, but it does mean that if Bitcoin is showing bullish momentum now, miners shouldn’t be a barrier to it for now.
An interesting long-term trend to note in the Miner Selling Power graph is that the statistic has been on a general downward trend over the past five years. This means that miners have been selling less and less BTC over time compared to their reserves, suggesting that they have instead been building and increasing their supply.
BTC price
At the moment of writing, The price of Bitcoin floating around $16,800, up 1% over the past week.
BTC continues to display boring price action | Source: BTCUSD on TradingView
Featured image of Jievani Weerasinghe on Unsplash.com, charts from TradingView.com, CryptoQuant.com