On-chain data shows that Bitcoin miner exchange inflows have shot up recently, something that could extend BTC’s price drawdown.
Bitcoin Miner To Exchange Flow Metric Has Seen A Spike
As pointed out by an analyst in a CryptoQuant Quicktake post, miners are upping their selling pressure. The on-chain indicator of relevance here is the “Miner to Exchange Flow,” which, as its name implies, keeps track of the total amount of Bitcoin moving from the miner entities to exchange-associated wallets.
When the value of this metric is high, it means the miners are transferring a large number of coins to these central platforms. Generally, these chain validators deposit to exchanges when they want to sell, so this kind of trend can be a bearish sign for the asset’s price.
On the other hand, the indicator being low implies the miners may not be interested in selling as they are only making a low amount of exchange inflows. Such a trend can naturally be bullish for the cryptocurrency.
Now, here is a chart that shows the trend in the Bitcoin Miner to Exchange Flow over the last few months:
The value of the metric appears to have registered a spike in recent days | Source: CryptoQuant
As displayed in the above graph, the Bitcoin Miner to Exchange Flow has observed a spike in the past day, which suggests the miners have made a hefty deposit to the exchanges.
In the last couple of weeks, there have also been other large spikes in the metric, with an interesting commonality between most of them being that they all came after plunges in the asset’s price. The latest spike has also followed this pattern. Thus, it would appear that the chain validators have been panic-selling during this phase of bearish momentum.
Miners are entities that have to participate in regular selling in order to sustain their operations, as they have constant running costs in the form of electricity bills. Most of the time, the selling pressure from the cohort is readily absorbed by the market, so the BTC price tends not to see a bearish effect from it.
In cases where the selloff is of a particularly notable scale, however, Bitcoin can indeed feel an impact. “Sustained selling from miners can slow recovery unless absorbed by strong demand,” notes the quant.
It now remains to be seen whether BTC Miner to Exchange Flow would see a cooldown in the near future, or if miners would continue to part with their holdings, potentially causing the price downtrend to extend.
BTC Price
Bitcoin briefly fell under the $77,000 mark during yesterday’s plunge, but the coin has since seen a rebound as its price is now back at $80,700.
Looks like the price of the coin has been sliding down over the last few days | Source: BTCUSDT on TradingView
Featured image from Dall-E, CryptoQuant.com, chart from TradingView.com
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