Why keeping an eye closely on Bitcoin miners’ activities for the next fortnight is crucial

Spread the love

The narrative of a bear-led correction is always around, even during the headiest of bull runs. A similar situation is unraveling at the moment, with many still expecting Bitcoin’s performance to take a more calamitous turn.

At press time, while Bitcoin had recovered to climb north of $50,000, some key on-chain metrics seemed to suggest that selling pressure might not be done yet, especially on the miners’ side.

Bitcoin Miners’ Outflow Multiple, Volumes on the rise

According to Glassnode data, Bitcoin Miner Outflow Multiple climbed to touch a monthly high after BTC’s decline on the charts. The aforementioned metric relates to the period of time when the amount of Bitcoin flowing out of miners’ addresses is higher than the historical average.

Alongside the same, Outflow volumes of Bitcoin miners also climbed to a 1-month high with over $4.5 million on a 7-day average.

Now, while at first glance that may sound concerning over the short-term, the fact of the matter is that the long-term perspective is still in the green.

Source: CryptoQuant

The Miners’ Position Index is a good example. When the market was correcting back in mid-January, the MPI had surged to a high of 12.65, underlining extremely high selling pressure from miners (An Index reading of over 2 suggests that a majority of miners are selling). On the contrary, the latest drop in Bitcoin’s price pushed the MPI only up to 3.50, with the same down to 2.56, at press time.

RECOMMENDED READ:  California University Pays Million-Dollar Crypto Ransom

Further, additional data seemed to suggest that small miner outflows may have contributed to high outflow volumes since these entities need to balance out their cash reserves on a consistent basis.

Bitcoin hashrate and difficulty is still relatively high

The relative hashrate for Bitcoin has dropped over the course of February, but it is important to note that over the past 3 days, the relative change is very negligible. In fact, the current hashrate is still well above 2020’s highest rate, a finding that means that miners are still active and possibly profitable, despite corrections being the norm for most of the past 24-36 hours.

Source: blockchain

On the question of mining difficulty, the attached chart seemed to suggest that the difficulty was at an all-time high on 23 February with a hashrate of 21.724t. With a difficulty adjustment imminent on the charts, a minor correction would mean that bear-led corrections would not be dragged forward due to miners’ activity.

That being said, it remains critical to monitor miners’ position over the next couple of weeks.

 432 Interactions,  6 today

Why does Mike Colyer believe cryptocurrency mining can pave the way to 100 percent clean energy production?

"At some point Bitcoin mining will look like a utility, and it’s going to be a part of critical infrastructure Read more

US company spends $34 million on 4,800 Bitcoin miners.

Following the acquisition of 4,800 new S19J mining rigs from Bitmain, a US company plans to more than double its Read more

Is there a ‘revolution’ in Bitcoin mining in the United States?

Bitcoin, the world's first blockchain, was created to address the flaws of the centralised financial structure. PayPal co-founder Peter Thiel, Read more

Bitcoin mining income in the United Kingdom is increasing, but China accounts for 75% of ‘blood coin’ demand.

Argo Blockchain, headquartered in the United Kingdom, recently recorded record sales, but according to a new survey, 75 percent of Read more

Ethereum hashrate is increasing, and a 2,000 Megahash ETH miner is expected to be released this summer, according to reports.

Innosilicon, a mining rig maker, launched a new ethereum miner named the Innosilicon A10 Pro+ in December 2020, which processes Read more

RECOMMENDED READ:  What are traders talking about Bitcoin's latest all-time peak of $63K?
How Abkhazia is expanding existing “temporary ban.” on crypto-mining, 

Abkhazia, a “partially recognised state in the South Caucasus,” has long been common among many in the cryptocurrency community, especially Read more

Why mayor of Miami claims that 90 percent of Bitcoin mining is driven by ‘dirty energy.’

According to Mayor Francis Suarez, the United States should resolve the environmental concerns associated with Bitcoin mining by providing clean Read more

Here’s the impact the Term “Green Bitcoin” is likely to exert on the Crypto Mining Industry

Argo Blockchain, a cryptocurrency company headquartered in London, recently revealed plans to create the world's first renewable energy Bitcoin mining Read more

Hut 8, a bitcoin miner, to partner with Foundry USA Pool, a DCG subsidiary.

Hut 8, a mining company located in Canada, is now mining with Foundry USA Pool, a wholly owned subsidiary of Read more

With an eye on EIP-1559, the Ethereum mining pool introduces the MEV Beta software.

Ethermine, the world's largest Ethereum mining pool, launched the Miner Extracted Value [MEV] technique to compensate miners for the infamous Read more

How Bitcoin miners are assisting towards the next rally.

The first quarter of 2021 is coming to a close, but the world for Bitcoin has been anything but monotonous. Read more

Leave a Reply

Contact Us