Bitcoin Falls to $20,700 as Miner Outflows Rise

[ad_1]

On-chain data shows that outflows from Bitcoin miners have increased, suggesting that the sell-off of this cohort could be behind the crypto’s decline to $20,700.

Bitcoin Miner Outputs Have Recorded Multiple Spikes Recently

As one analyst pointed out in a CryptoQuant post on Wednesday, miners deposited 669 BTC on exchanges. A relevant metric here is the “Miner Reserve,” which measures the total amount of Bitcoin that miners as a whole currently hold in their wallet.

“Miner outflow” is a metric that tells us the total number of coins that these blockchain validators are currently transferring out of the miner pool. Naturally, the value of the reserve decreases each time the output registers a spike, since an equal or greater amount of crypto is not flowing through it at the same time.

Typically, miners withdraw BTC from their stash for sale. So, whenever the exit sees high values ​​(or alternatively, the reserve sees a big drop), it means that this cohort could be participating in large amounts of selling right now.

Now, here is a graph that shows the trend of Bitcoin miner outflows and miner pool over the past two months:

The value of the reserve seems to have observed a significant drop in recent days | Source: CryptoQuant

As the chart above shows, the outflow of Bitcoin miners has seen two very large spikes in the past few days. The January 14 peak measured around 4,089 BTC, while the January 17 peak was 2,500 BTC.

Along with these outflows, their reserves also dropped, meaning there wasn’t a lot of volume coming in to offset these outflows. On Wednesday there was also a third peak, but it was significantly smaller than the other two.

However, there was still something about this release that deserves attention. Approximately 669 BTC of this outflow was directed to centralized exchanges. This can be seen in the data for the “minor to exchange flow” metric, which is also shown in the chart.

Usually, exchanges are what investors use to quickly swap their bitcoin in favor of altcoins or stablecoins, or simply withdraw into fiat. While miner exits alone can be a sign that there are sell-offs going on (because these holders may simply be using over-the-counter (OTC) deals instead of exchanges), deposits directly to exchanges provide more evidence that selling might be the intent behind the exits.

While part of the third outflow headed to exchanges, the first two larger peaks did not appear to have coincided with significant deposits to these platforms.

Nevertheless, the fact remains that following the first two outings, the Bitcoin rally slowed down, and after the third (which headed to exchanges), BTC fell outright and reached 20,700 $. This could suggest that the sale of miners may have played a role in these developments in the price of the asset.

BTC price

As of this writing, Bitcoin is trading around $20,700, up 14% in the past week.

Looks like BTC has taken a dive over the past day | Source: BTCUSD on TradingView

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

[ad_2]