Miners dump bitcoins? These 3 diagrams will give you the answer
Bitcoin fell below $ 30,000 for the first time in a long while of consolidation, which begs the question of whether BTC miners have started selling.
Bitcoin price 4-hour chart | Source: Tradingview
BTC has returned to an intraday lows below $ 30,000, a key level of support sustained by the weekly close during the last two-month consolidation.
Although the price made a hard recovery, there is a clear trend that long-term owners (stronger ones) and wealthy BTC miners are accumulating rather than selling.
Bitcoin miners accumulate
Bitcoin miners can be considered one of the most optimistic companies out there. They are investing millions, if not tens of millions, of dollars building energy infrastructure and collecting hash power to mine Bitcoin. As with commodities, there is an incentive for market participants to “mine” or accumulate when the asset is in high demand and is believed to be of high value.
Smaller miners with less capital are more likely to sell coins at less than ideal times like these. You may not have enough net cash to continue operating without selling your mined BTC. In contrast, larger, well-capitalized miners will likely hold the mined BTC and wait for a higher selling price.
In the graphic below, on-chain analyst Wu Blockchain has noted an increase in the “average” amount of BTC that miners transfer to the exchange. In the course of 2021, the index forms smaller peaks with an average of 60 BTC. On July 17, the average rose to 98.6171 BTC, which signals caution.
Average amount of BTC transferred to the exchange by miners | Source: CryptoQuant
While this indicator of miners’ activity seems like a red flag, it’s important to consider what happened to the BTC price on similar events. For example, in the fourth quarter of 2020, the metric saw many spikes and averaged a high of 120 BTC. After that, BTC broke out to a new all-time high, skyrocketing to $ 40,000 in January 2021.
In addition, the total amount of BTC that is transferred to the exchange by miners must also be taken into account. In the graph below, the total amount of BTC transferred to the exchange by miners has fallen in the range of 30,000 – 40,000 during consolidation.
River of all miners | Source: CryptoQuant
This shows that larger and well-capitalized miners are refusing to sell at current prices. You are HODLing in anticipation of higher prices in the future. This explains the increased change in the miner’s net position on Glassnode.
Change in the miner’s net position | Source: CryptoQuant
Due to the financial pressure on smaller miners, they are most likely the sellers of BTC during the consolidation phase and are at risk of being wiped out if BTC closes below $ 30,000.
Right now, BTC is at an intraday low below $ 30,000 on very low volume, a sign that long-term owners and larger miners are determined not to sell.
According to Cryptopotato