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04 October, 2024

Bitcoin Miner Selloff Cooling Down: Is This a Green Light for a Rally?

04 October, 2024

Bitcoin Miner Selloff Cooling Down: Is This a Green Light for a Rally?

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Recent on-chain data reveals a declining trend in Bitcoin miner exchange inflows, potentially hinting at a bullish future for the asset’s price. This suggests miners might be easing their selling pressure, a positive development for the market.

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According to CryptoQuant author Axel Adler Jr., miners have been gradually reducing their exchange inflows, indicating a shift in their behavior. Exchange inflows represent transactions from self-custodial addresses to wallets associated with centralized exchanges. When miners transfer Bitcoin to exchanges, it’s generally interpreted as a sign they’re planning to sell.

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Miners face continuous operational costs, primarily electricity bills, necessitating regular sales to sustain their operations. These regular sales typically don’t significantly impact the asset’s price. However, substantial and sustained exchange inflows can signal heightened selling pressure from this group.

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The chart shared by the analyst, showing the 30-day moving average (MA) of Bitcoin miner exchange inflows, highlights a significant drop in the first few months of the year, followed by a sharp rebound. This surge in inflows can be attributed to the fourth Bitcoin Halving in April. Halvings, occurring approximately every four years, permanently cut the block subsidy in half.

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The analyst’s chart also displays the coin issuance on the network, clearly demonstrating the impact of the Halving. After each Halving, miners can only mint half the number of coins they did before. Miners derive their income primarily from the block subsidy, which suffered a drastic decline after the latest Halving. The increased exchange inflows suggested miners were selling off reserves in response to this revenue squeeze.

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Despite the high inflows, the recent reversal in the 30-day MA of Bitcoin miner exchange inflows suggests a potential shift in this cohort’s selling strategy. If this trend persists, it could benefit the cryptocurrency’s price.

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BTC Price

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Bitcoin’s price has retraced a portion of its recent gains in the past few days, currently trading around $60,300. This recent downturn could be influenced by various factors, including macroeconomic uncertainties and the continued volatility in the cryptocurrency market.

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It’s crucial to note that this analysis is based on on-chain data and market observations. The cryptocurrency market remains highly volatile, and predicting future price movements with certainty is impossible. It’s always advisable to conduct thorough research and consider your risk tolerance before making any investment decisions.