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On-chain data shows that Bitcoin miners have continued to sell lately, which could be a sign of a bearish price for the cryptocurrency.
Bitcoin miners’ reserve has been declining since the start of the rally
As an analyst noted in a CryptoQuant post, BTC miners have been continuing to dump coins from their reserve lately. Miner Reserve is an indicator that measures the total amount of Bitcoin that all miners currently hold in their wallets.
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When the value of this indicator increases, it means that miners deposit a certain amount of coins into their wallets. This trend suggests that these blockchain validators are accumulating cryptocurrency. Since miners are often a source of selling pressure in the market, holding them and increasing their supply can be bullish for the price.
On the other hand, a decrease in the value of this indicator means that the miners are transferring some amount of BTC from their reserve. Since one of the main reasons these investors may withdraw funds from their wallets is due to selling, such a trend could have a bearish effect on the value of the asset.
And now here is a chart showing the trend of the Bitcoin miner reserve over the past year:
The value of the metric seems to have dropped in recent days | Source: CryptoQuant
The chart above shows that the Bitcoin miner pool plummeted as soon as the January rally began, suggesting that these investors sold to take advantage of the profit taking opportunity. The drawdown of the indicator in this case was also quite sharp and exceeded the levels seen during the crash of FTX in November last year.
Since this sell-off, the miner pool has only moved sideways or down, suggesting that these holders have not been hoarding in recent months; they were only considering the chances of an exit.
Recently, when Bitcoin fell from the $30,000 mark, the indicator went down sharply again, which meant that this group was again selling their BTC.
The indicator’s drawdown has also continued due to the price volatility seen in the past few days, indicating that BTC miners are still getting rid of their coins.
While these investors may have recently sold a net amount of coins, the actual scale of their sale is not all that significant compared to their total reserve (they currently hold over 1.82 million BTC in their wallets).
However, the analyst notes that miners holding onto their coins for longer periods could be one of the deciding factors for the health of the bullish trend.
Now, it remains to be seen if these holders will be able to reverse the trend anytime soon or if they will continue to sell bitcoin in the short term. Any possibility is likely to have a strong impact on the price of BTC.
At the time of writing, Bitcoin is trading around $28,100, up 3% over the past week.
It looks like the value of the asset has fallen over the last day | Source: BTCUSD on TradingView