Bitcoin’s latest price drop was not sudden, particularly because there were signs on the charts. In reality, there were many metrics that pointed at a price drop after the price had passed $50,000 metrics, including on-chain research, fear and greed index, volatility, and network momentum.
Miner’s operation, considered the most important to Bitcoin’s market behaviour, also signalling a price decline, with the same hint of a further drop in Bitcoin’s price soon. Bitcoin miners are the largest sellers in almost every business cycle, so there is a consistent selling of Bitcoin to miners. Bitcoins from mining pools and individual mining wallets hit spot exchanges, creating liquidity in almost every market cycle. In addition, this crucial role in the Bitcoin business cycle makes the on-chain activity of miners suitable for signal deriving.
The proportion of tagged miner outflows in the attached CoinMetrics map illustrates shifts in miner outflows through spots and derivative exchanges in the past. Just before a drop in Bitcoin’s price, miner’s inflows to spot exchanges reach a peak or local maximum.
It reached a high of 37,000 in the most recent event. Soon enough, the crypto asset plummeted to the $47,000 level of exchange. However, if Bitcoin’s netflows on exchanges rose more, it might signal a further decrease in prices. Bitcoin MPI, perceived to be another important metric, was 1.94 at press time, down from 3.5 on 21 February.
When Miner’s position index or MPI is greater than 2, there is high selling pressure since miners are selling. Since the value of the MPI was 1.94 at press time, closer to 2, it can be concluded that the miners are still selling, despite the fact that the pressure on sales has decreased.
Finally, it is perhaps alarming that the largest inflows from miners hit Binance and Huobi, among other major exchanges. In fact, bitcoin inflows to Binance are still on the charts.
Since bitcoin inflows to Binance are climbing the drop to $47,000-level, there is a further possibility of a price correction. When the inflows to Binance finally fall, they signal a short-term fall in sales pressure and price stability.
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