On-chain data shows the Bitcoin miner reserve has observed a decline recently, a sign that may be bearish for the price of the cryptocurrency.
Bitcoin Miner Reserve Has Been Going Down In Recent Days
As pointed out by an analyst in a CryptoQuant post, the BTC miner reserve has now hit new yearly lows. The “miner reserve” is an indicator that measures the total amount of Bitcoin currently sitting in the wallets of all miners.
When the value of this metric rises, it means miners are adding more coins to their wallets right now. Such a trend suggests this cohort is interested in accumulating BTC currently. Miners are an important part of the market and their HODLing the coin can be a positive sign for the price.
On the other hand, the indicator’s value going down implies this cohort is withdrawing their coins from their wallets at the moment. Usually, the main reason why miners transfer the asset out of their reserves is for selling purposes. Thus, the price of the cryptocurrency could feel a bearish impact whenever the metric shows this trend.
Now, here is a chart that shows the trend in the Bitcoin miner reserve over the last year or so:
As displayed in the above graph, the Bitcoin miner reserve has been moving on a downward trajectory since the latest rally in the asset’s price started. This means that these chain validators have been looking at the price surge as a profitable exit opportunity.
Normally, the reason why miners sell their coins is because of the fact that they always have to pay continuous running expenses like electricity bills. Particularly large selloffs, however, can be a sign that they are struggling more than usual right now.
After the initial plunge in the indicator (which was when the rally had only just ramped up), the metric had gone stale for a while. Recently, however, the miner reserve has noticed some fresh decline.
This new downtrend in the indicator has in fact coincided with the BTC price also showing a decline, suggesting that it may have been selling from the miners that were behind the price plunge.
Following the latest leg down in the Bitcoin miner reserve, the indicator’s value has now hit a new yearly low. As the decline hasn’t actually slowed down in the last few days, it’s possible that this cohort has still not finished their selloff.
“This selling behavior might end up in a mid-term bearish sentiment in the market,” notes the quant. “As a result, it is better to manage risks in the upcoming weeks.”
At the time of writing, Bitcoin is trading around $21,600, down 7% in the last week.
Euler Finance exploiter returns another $37.1M worth of ETH and DAI
XRP Is A Buy At Current Prices, Says John E. Deaton
Crypto exchange Binance launches new regional hub in Georgia