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On-chain data shows Bitcoin miners may be dumping right now, a sign that could hamper the rally.

Bitcoin miners position index has recently increased

As one analyst pointed out in a CryptoQuant Publish, miners can put selling pressure on the market right now. The relevant indicator here is the “Miners Position Index(MPI), which measures the ratio of miner exits to the 365-day moving average of miners.

The “exits of minorsrefers to the total amount of Bitcoin that all of these chain validators are transferring from their wallets right now. Usually, miners withdraw coins from their stashes with the main purpose of selling them. Thus, a high outflow value may suggest that this cohort is shedding large amounts at this time.

As the MPI compares these outflows with their annual average, the value of the metric can tell us how the current sale of miners compares to the average of the last 365 days.

When this metric has a high value, it means that miners are selling to a higher degree than usual currently, while the metric with a low value could suggest that the selling pressure coming from these chain validators is less than the average for the past year.

Now, here is a graph that shows the trend of Bitcoin MPI over the past year and a half:

Bitcoin MPI

The value of the metric seems to have been quite high in recent days | Source: CryptoQuant

As shown in the chart above, the Bitcoin MPI has recently risen and reached a value of around 4, the highest level seen by the indicator since April last year. The metric having such a high value would suggest that miners are withdrawing far more coins than usual, and therefore potentially exerting extraordinary selling pressure on the market right now.

From the chart, it is evident that the spikes in the metric were generally followed by declines in the price of the crypto. The most extreme example dates back to April 2022, when the price experienced a very sharp decline shortly after the metric recorded even higher values ​​than today.

The last time the indicator observed high values ​​was during the collapse of the FTX crypto exchange when the price again experienced a rapid decline.

Bitcoin has been busy rallying over the past week, hitting $21,000 so far, so these increased drawdowns right now would suggest that miners want to take advantage of this profit opportunity while they still can and throw away their parts.

If this cohort indeed intends to sell off with these transfers, then the crypto rally could eventually find some impedance and temporarily halt here, if not reverse its direction altogether.

BTC price

As of this writing, Bitcoin is trading around $20,800, up 20% in the past week.

Bitcoin Price Chart

The value of the asset seems to be finding it hard to make a significant break above $21,000 | Source: BTCUSD on TradingView

Featured image of Kanchanara from Unsplash.com, charts from TradingView.com, CryptoQuant.com



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