Bitcoin (BTC) miners appear to be selling large amounts of BTC once again. Data from CryptoQuant shows that the BTC Miners’ Position Index — a metric tracking the ratio of BTC leaving miners’ wallets — achieved a three-year high. This trend indicates that miners are likely selling BTC on over-the-counter or spot exchanges.
On Dec. 10, two large miner-linked Bitcoin transactions were spotted right as the Miner’s Position Index abruptly spiked to levels unseen since 2017, according to data from CryptoQuant.
First, around 800 BTC, worth $14.5 million, moved to Binance. Second, 11,852 BTC, equivalent to $215.9 million, moved to an unknown cold wallet.
Not a good short-term signal for Bitcoin
Miners typically sell Bitcoin through spot or OTC exchanges. When a sell-off occurs on spot exchanges, it could intensify the near-term selling pressure on BTC. The impact on the BTC price is not as immediately felt when miners sell on OTC exchanges, since they are directly selling to buyers.
According to Ki Young Ju, the CEO of CryptoQuant, miners sold “a lot” of Bitcoin on Dec. 10. Although Ki remains optimistic about the price of BTC heading into January, he explained that this is a potentially worrying trend in the foreseeable future. He said:
“Obviously, miners are selling $BTC a lot today. I’m still long, but this is not a good signal in the short-run.”
Other analysts asked Ki whether miners are selling enough Bitcoin to have a considerable effect on the near-term price trend of BTC. In response, Ki noted that although the total outflow is not significantly large, the miner outflow is still relatively high compared to the last few days. He added:
“The total outflow is not that big, but it’s relatively increasing compared to past days. Also, the number of outflow txns is unusually high today. The miner-to-exchange flow seems small for now, so I stick to my long. I hope those outflows are OTC deals.”
Miners can place significant selling pressure on Bitcoin, especially if large amounts are collectively sold on exchanges. However, in the medium to long term, the accumulation of BTC by institutions could offset the sell-off.
Why this isn’t so concerning in the medium term
In May, Cointelegraph reported that the Grayscale Bitcoin Trust (GBTC) had been accumulating more Bitcoin than was being mined.
In recent months, Grayscale has continued adding to its reserves to pass $10 billion in assets under management. If this trend remains intact, it can help offset the selling pressure from miners and whales in the short to medium term.
In October, Dan Tapiero, the co-founder of 10T Holdings, said Bitcoin could also face a potential supply crisis as a result.
Miners could cause a short-term Bitcoin pullback, but BTC repeatedly failed to surpass the $19,600 resistance level. Hence, an argument could be made that the sell-off from miners comes during a period when investors already anticipated a sharp correction.
Moreover, on-chain indicators such as the low exchange inflows and Bitcoin exchange reserves at the lowest level since August 2018 could also offset near-term bearishness, preventing BTC from dropping further to $16,000 or possibly lower.