Market Analysis

‘Not a good signal’ — Bitcoin miner sell-off risk hits highest in 3 years

The Bitcoin Miners’ Position Index achieved a three-year high, indicating that miners are likely in a selling mood.

Bitcoin (BTC) miners appear to be selling large amounts of BTC once again. Data from CryptoQuant shows that the BTC Miners’ Position Index  — a metric tracking the ratio of BTC leaving miners’ wallets — achieved a three-year high. This trend indicates that miners are likely selling BTC on over-the-counter or spot exchanges.

‘Not a good signal’ — Bitcoin miner sell-off risk hits highest in 3 years

Bitcoin Miners’ Position Index. Source: CryptoQuant

On Dec. 10, two large miner-linked Bitcoin transactions were spotted right as the Miner’s Position Index abruptly spiked to levels unseen since 2017, according to data from CryptoQuant.

First, around 800 BTC, worth $14.5 million, moved to Binance. Second, 11,852 BTC, equivalent to $215.9 million, moved to an unknown cold wallet.

‘Not a good signal’ — Bitcoin miner sell-off risk hits highest in 3 years

Bitcoin miner outflows. Source: Ki Young Ju

Not a good short-term signal for Bitcoin

Miners typically sell Bitcoin through spot or OTC exchanges. When a sell-off occurs on spot exchanges, it could intensify the near-term selling pressure on BTC. The impact on the BTC price is not as immediately felt when miners sell on OTC exchanges, since they are directly selling to buyers.

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According to Ki Young Ju, the CEO of CryptoQuant, miners sold “a lot” of Bitcoin on Dec. 10. Although Ki remains optimistic about the price of BTC heading into January, he explained that this is a potentially worrying trend in the foreseeable future. He said:

Miners could cause a short-term Bitcoin pullback, but BTC repeatedly failed to surpass the $19,600 resistance level. Hence, an argument could be made that the sell-off from miners comes during a period when investors already anticipated a sharp correction.

Moreover, on-chain indicators such as the low exchange inflows and Bitcoin exchange reserves at the lowest level since August 2018 could also offset near-term bearishness, preventing BTC from dropping further to $16,000 or possibly lower.

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