“Not a good signal” – The sell-off risk for Bitcoin miners is highest in 3 years


Bitcoin miners (BTC) seem to be selling large amounts of BTC again. Data from CryptoQuant shows that the BTC Miners ‘Position Index – a metric that tracks the ratio of BTC leaving miners’ wallets – has hit a three-year high. This trend suggests that miners are likely to be selling BTC on over the counter (OTC) or spot exchanges.

Bitcoin miners position index. Source: CryptoQuant

On December 10th, two large Bitcoin transactions related to miners were discovered when the miner’s position index rose abruptly to levels not seen since 2017, according to CryptoQuant.

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Initially, around 800 BTC moved to Binance, which is worth $ 14.5 million. Second, 11,852 BTC moved into an unknown cold wallet, which is the equivalent of $ 215.9 million.

Bitcoin miner drains. Source: Ki Young Ju

Not a good short-term signal for Bitcoin

Miners usually sell Bitcoin through spot or OTC exchanges. If there is a sell-off on spot exchanges, it could add to short-term selling pressure on BTC. The effects on BTC price are not felt as immediately when miners sell on OTC exchanges as they are selling directly to buyers.

According to Ki Young Ju, the CEO of CryptoQuant, miners sold “a lot” of Bitcoin on December 10th. While Ki remains bullish on the price of BTC in January, he stated that it was a potentially worrying trend for the foreseeable future. He said:

“Obviously, miners sell a lot of BTC these days. I’m still long but not a good signal in the short term. “

Other analysts asked Ki whether miners are selling enough Bitcoin to have a significant impact on BTC’s short-term price movement. In response, Ki noted that while the total runoff is not significantly large, the miners runoff is still relatively high compared to the last few days. He added:

“The total runoff is not that great, but it is increasing relatively compared to the past few days. The number of drain shipments is also unusually high today. The miner-to-exchange flow seems low for now, so I’m sticking with my long one. Hope these outflows are OTC deals. “

Miners can put significant selling pressure on Bitcoin, especially when large quantities are sold together on exchanges. In the medium to long term, however, the accumulation of BTC by institutions could offset the sell-off.

Why this is not so important in the medium term

In May, Cointelegraph reported that the Grayscale Bitcoin Trust (GBTC) had accumulated more bitcoin than mined it.

Over the past few months, Grayscale has continued to add to its reserves to reach $ 10 billion in assets under management. If this trend stays intact, it can help offset the selling pressures from miners and whales in the short to medium term.