Bitcoin Miner Selling Power Plunges, Green Signal for Price?

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On-chain data shows that the selling power of Bitcoin miners has recently fallen, a sign that could be positive for the price of the crypto.

The selling power of Bitcoin Miner has dropped in recent days

As one analyst pointed out in an article on CryptoQuant, there has been less selling pressure from miners recently. There are two relevant indicators here, miner supply and miner outflow. The first of these, miner supply, is simply a measure of the total amount of Bitcoin that is currently in miners’ wallets.

The other, miner output, is a metric that tracks the total number of coins that miners are transferring from their supply at the moment. Now, “miner selling power” is defined as this miner outflow divided by miner supply (30-day moving average, log scale).

When the value of this indicator is high, it means that miners are transferring large amounts compared to their total supply at the moment. Since miners usually dump their BTC for dumping purposes, this trend may be bearish for the value of the crypto. On the other hand, the low values ​​suggest that miners are currently spending relatively little.

The chart below shows the trend of Bitcoin miner selling power over the past few years:

The value of the metric seems to have plunged in recent days | Source: CryptoQuant

As shown in the chart above, whenever the Bitcoin miner’s sell power reached high values ​​and established a local peak, the crypto’s price trended lower. This trend makes sense as highs in the metric suggest increased selling pressure from these chain validators.

Recently, the indicator showed such a formation again, and BTC also reacted with a drop this time, as its price fell from above $18,000 to the current level of $16,000. However, since this recent spike, the selling power of miners has rapidly declined and has now reached a new low.

This moderate selling pressure from miners may not necessarily be bullish on its own, but it does mean that if Bitcoin is showing bullish momentum now, miners would provide no hindrance to it at this time.

An interesting long-term trend to notice in the miner sell power chart is that the metric has been on a general downward trend for the past five years or so. This means that over time, miners have been selling less and less BTC relative to their reserves, suggesting that they have instead been hoarding and increasing their supply.

BTC price

As of this writing, the price of Bitcoin is hovering around $16,800, up 1% in the past week.

BTC continues to show boring price action | Source: BTCUSD on TradingView

Featured Image by Jievani Weerasinghe on Unsplash.com, Charts by TradingView.com, CryptoQuant.com

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