According to on-chain data aggregated by CryptoQuant, it seems that Bitcoin (BTC) miners have gone from sellers to holdeurs. In fact, they now own the most BTC since January 2021. Is the impact of the turbulence of the past few weeks fading?
Miners are accumulating Bitcoin (BTC)
It’s a relatively interesting indicator of the trend in the cryptocurrency market: the behavior of Bitcoin (BTC) miners. While they had recently shown strong signs of capitulation, mostly selling the BTC they were mining, the trend seems to have completely reversed.
As a reminder, capitulation occurs when holders of an asset become weary and give up their previous gains by selling their positions in a bear market. After several weeks of considerable latent deficit on crypto-currencies, many investors have already started selling at a loss.
And this was especially true of miners, who sold off their bitcoins en masse during the free fall from $30,000 to $20,000 last June. However, as a recent analysis by CryptoQuant shows, it seems that their sentiment towards the market has reversed: the amount of BTC in their wallets has reached a new high since January 2021.
As of July 29, the combined balance of all recognized Bitcoin miner wallets stood at 1,865,272 BTC. Although the beginning of August saw a slight decrease, with a total of 1,864,842 BTC as of August 3, the increase is still significant. Between the beginning of July and today, this figure has risen by 0.37%, or 6,885 BTC.
In other words, it seems that the miners’ bitcoin reserves have fully absorbed the June capitulation. This was particularly felt in the fundamentals of the network, with a drop in the hash rate reflecting the abandonment of the least profitable miners.
Miners are selling less and less BTC
Other indicators also point to the fact that the capitulation phase of miners might be coming to an end. One of them is the number of BTC transferred from miners’ recognized wallets to exchanges.
It is easy to see that the sudden drop in the market last June, taking Bitcoin from $30,000 to less than $20,000 in the space of a few days, has had an impact on the behavior of miners. As indicated by the many massive spikes in June, miners abandoned their positions at a loss and unloaded their Bitcoin reserves.
However, over the past few weeks, the price of Bitcoin has stabilized. This has obviously helped to calm market sentiment and at the same time the more risk-averse miners. As this graph shows, since this plunge, they have not sold more than 1000 BTC per day to the exchanges. Furthermore, on August 2, the incoming flows from miners to exchanges totaled only 359 BTC.
Finally, we will look at one last indicator, somewhat similar to the previous one. The Miner Position Index (MPI) also provides information about the spending and saving behavior of Bitcoin miners. In a few words, it is the ratio of the daily total of miners’ outflows (in USD) to the one-year moving average of that same total.
According to our on-chain analyst Prof. Chaîne, who regularly speaks for Cryptoast and on the private Grille-Pain group, this graph is an excellent indicator for understanding miner behavior:
“A high value shows that miners are sending more coins than usual out of their identified wallets, indicating a potential sale.”
Indeed, the main peaks correspond to either a massive profit taking by miners in the bullish phase, or conversely to a capitulation to the fall. Currently, the peaks are rather diminishing. As a result, it seems that the trend for July is to limit spending and to accumulate.
To conclude, it is important to remember that miners are, by nature, very spendy. And for good reason, selling is the only way to cover the electrical costs of producing Bitcoin.
