What’s Behind The Recent Bitcoin Drop? Here’s What On-Chain Data Says
24 April 2023 - 9:40PM
NEWSBTC
Bitcoin on-chain data hints that selling from the miners may have
been behind the latest plunge in the asset’s price below the
$28,000 mark. Bitcoin Miners Have Shown Signs Of Selling Recently
As pointed out by an analyst in a CryptoQuant post, miners had been
putting on some selling pressure on Bitcoin while the decline had
happened. A relevant indicator here is the “miner netflow,” which
measures the net amount of Bitcoin entering into or exiting the
wallets of all miners. When this metric has a positive value, it
means a net number of coins is being transferred into the wallets
of miners right now. Such a trend implies that these chain
validators are accumulating currently, which is naturally something
that could be bullish for the price. On the other hand, negative
values suggest miners are transferring some BTC out of their
holdings at the moment. Usually, miners transfer out their coins
whenever they want to sell them. Hence, negative netflow values can
have bearish consequences for the asset. Now, here is a chart that
shows the trend in the 30-day simple moving average (SMA) Bitcoin
miner netflow over the past week or so: The 30-day SMA value of the
metric seems to have been quite negative in recent days | Source:
CryptoQuant As displayed in the above graph, the 30-day SMA Bitcoin
miner netflow registered a very sharp red spike when the
cryptocurrency’s price was in the middle of its decline a few days
ago. BTC was just above $28,000 when this spike came, but the asset
rapidly plummeted to the low $27,000 level following it. The timing
of these large net outflows taking place from the miners may be a
sign that it was this cohort’s selling that at least partially
contributed to the coin’s drawdown. Related Reading: Bitcoin Market
Update: Is $27,000 The Local Bottom? The chart for the 30-day
exponential moving average (EMA) Bitcoin miner reserve, a metric
that measures the total amount of BTC all miners are holding right
now, also shows this spike: Looks like the value of the indicator
has plunged recently | Source: CryptoQuant This plummet in the
Bitcoin miner reserve from a few days ago naturally makes sense, as
the netflow is nothing but a measure of the changes taking place in
this metric. From the chart, it’s visible that while the outflows
may have been sizeable, they still haven’t significantly affected
this cohort’s total holdings, meaning that many miners are still
sitting still on their wallets. Related Reading: China Is Fast
Losing Money: Their Bitcoin Stash Just Fell By $388 Million
Nonetheless, compared to the average during the last 365 days, the
current outflows are very large, as the data for the 14-day EMA
Miners’ Position Index (MPI) below displays. The metric has shot up
| Source: CryptoQuant It looks like the rate at which Bitcoin
miners are selling right now (proportional to the past year) is
greater than what even the FTX crash back in November 2022 saw. All
these indicators suggest that this extraordinary selling pressure
from these holders could be why BTC plunged to low $27,000 levels a
couple of days ago, something that the coin is yet to recover. BTC
Price At the time of writing, Bitcoin is trading around $27,300,
down 8% in the last week. BTC has plunged | Source: BTCUSD on
TradingView Featured image from Becca on Unsplash.com, charts from
TradingView.com, CryptoQuant.com
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