Miner trading flows signaled shifts in the price rally of Bitcoin in the current market cycle and the recent bull run in 2020 and also in the case of the bull run in 2017. It can seem intuitive that miners are on-site traders. However, based on the inflow of miners and their operation through Huobi and Binance, the top two exchanges that get the most inflow from mining pools, miners have also emerged as buyers. With a large presence in Asia, the mining outflow was dominant, suggesting that the miners were buying Binance and Huobi.
The above chart shows the outflow of bitcoin from spot exchanges to miners, and an increase in outflow suggests an increase in purchases from miners. On Huobi, Binance and Gemini, the outflow of miners increased steadily from 2019 to January 2021.
With regard to mining inflows, Huobi is at the top of exchanges, while Binance has a nearly equal share of both inflows and outflows. Miner production signal HODLing and given the change in the HODLing trend in the current market cycle, there could be support for the price of Bitcoin above the $50,000 stage.
Based on data from Cryptoquant, Binance Netflow remained positive at 2680k on 23 February 2020. The chart shows that the outflow of Binance is positive now, following a significant decrease in the outflow of Bitcoin earlier in February 2021. Netflow is relatively low compared to the last two days and this signals that mining transactions boost demand for on-site exchanges, decreasing sales pressure.
As a result, mining transactions supported Bitcoin’s price above $50,000, maintaining uncertainty and liquidity. Buying from miners helped a price above $50,000 that had a positive effect on the trader’s portfolio and contributed to unrealized gains. This adds to the bullish narrative and, as institutional demand grows, the net flow is projected to decrease further.
Stablecoin exchange inflows have decreased over the past two weeks and mining inflows and outflows have had a direct effect on Bitcoin’s price and the total market capitalization of cryptocurrencies.
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