On-chain data shows that Bitcoin miners have continued to sell recently, a sign that can be bearish for the price of the cryptocurrency.
Bitcoin Miner Reserve Has Been Going Down Since Rally Started
As an analyst in a CryptoQuant post pointed out, BTC miners have continued to shave coins off their reserve recently. The “miner reserve” is an indicator that measures the total amount of Bitcoin that all miners are holding in their wallets currently.
When the value of this metric goes up, it means the miners are depositing a net number of coins into their wallets. This trend suggests these blockchain validators are accumulating the cryptocurrency. As miners are often a source of selling pressure in the market, their holding on and adding to their supply can be bullish for the price.
On the other hand, a decreasing value in this indicator implies that miners are transferring some BTC out of their reserve. Since one of the main reasons why these investors may withdraw from their wallets is for selling-related purposes, such a trend can have bearish consequences for the asset’s value.
Now, here is a chart that shows the trend in the Bitcoin miner reserve over the past year:
The above graph shows that the Bitcoin miner reserve saw a sharp plunge just as the rally began in January, suggesting that these investors sold to take advantage of the profit-taking opportunity. The drawdown in the metric was also quite sharp in this case and surpassed the levels seen during the FTX crash last November.
The miner reserve has only moved sideways or down since this selloff, suggesting that these holders haven’t participated in any accumulation in recent months; they have only been looking at chances to exit.
Recently, when Bitcoin plunged from the $30,000 mark, the indicator again saw a sharp leg down, meaning that this cohort was again selling their BTC.
The drawdown in the indicator has also continued through the volatile price action observed in the last few days, suggesting that the BTC miners are still disposing of their coins.
Though these investors may have been selling a net amount of coins recently, the actual scale of their selling isn’t that significant compared to their total reserve (they currently hold upwards of 1.82 million BTC in their wallets).
The quant notes, however, that the miners holding onto their coins for longer periods could be one of the crucial factors for the bullish trend’s health.
It now remains to be seen whether these holders can reverse the trend anytime soon or if they will continue to sell Bitcoin in the short term. Either possibility is likely to have a profound effect on the BTC price.
At the time of writing, Bitcoin is trading around $28,100, up 3% in the last week.