Bitcoin miners' profit fixation unlikely to be an obstacle to bullish rally

Bitcoin miners have sold a significant amount of BTC in the last two months, but on-chain data analystsbelieve that this will not be an obstacle to the next bull rally.

Historically, it can be seen that some miners started selling bitcoins back in late July, which led to increased selling pressure in the cryptocurrency market.

In the end, starting around the middleAugust, the main cryptocurrency underwent a sharp decline, fixing a decrease in the rate by ~ 15%, and since then has not managed to return to its previous values ​​and overcome $ 12,000.

Miners selling Bitcoin in the period 2017-2020: BTC price and miner position index (MPI).:CryptoQuant

According to the CEO of CryptoQuant Ki Young JooJu), continued selling by miners may not be enough to prevent a new price rally. Firms specializing in the analysis of on-chain data closely monitor any actions of miners and whales, as they own significant amounts of BTC.

On-chain analyst Willie Wu explains that miners represent one of two external sources of selling pressure for Bitcoin. In a May tweet thread, he wrote:

“There are only two uncompensated sourcesselling pressure on the bitcoin market: (1) miners diluting the available supply and selling mined bitcoins on the market is a hidden tax in the form of monetary inflation; and (2) exchanges that impose commissions on traders and realize their profits in the market. "

When miners start to sell off their bitcoin holdings (usually to cover costs), it can trigger a correction in the market.

For example, from August 17 to September 5, the bitcoin price dropped from $ 12,486 to $ 9813. During this period, several whales were selling bitcoins directly in the $ 12,000 area, and miners did the same.

Sales pressure from miners and whales inThe current downturn in the crypto market is largely explained, but from a macro perspective, Ki Yong Joo explains, this is not enough to stop a prolonged bull rally.

If miners suddenly sell significantthe amount of BTC, this can cause a major correction, as even a small price movement may be enough to provoke the liquidation of positions of traders with excessive leverage. As a consequence, even a relatively small sale by miners can theoretically lead to significant price fluctuations.

At the same time, Ki Yong Joo believes that the intensity of sales from miners was not high enough to serve as an obstacle for future bull rallies:

“Some miners started selling stocksbitcoins have been around since late July, but I think in a macro perspective this level of selling pressure from miners is not enough to be an obstacle to the next bull rally. ”

According to ByteTree, net cash holdings of BTCbitcoin miners have been declining at a rate of 125 BTC per week in the past 12 weeks. The data shows that miners were selling BTC for about $ 1.362 million / week on top of the BTC they mined and sold during this period.

Number of BTC mined and sold in the last 12 weeks:ByteTree

Ki Yong Joo points out that according to the available data, the volume of BTC sold by miners during this period is significant, but within the normal range.

Post-halving bull cycle still on the agenda

Bitcoin is still trading above the $ 10,000 tech support despite bears' attempts to push the price below this key psychological level.

The resilience of bitcoin amid increased selling pressure suggests a cautious bullish trend over the long term.

Net Unrealized Gain/Loss (NUPL) of short-term Bitcoin holders. :Glassnode

Several on-chain metrics also indicate that Bitcoin is in a healthy phase of accumulation. As Rafael Schultze-Kraft, CTO Glassnode said:

"Indicator of net unrealized profit / lossshort-term holders (STH-NUPL), in my opinion, is giving a bullish signal. This bounce off the zero line is important as it is characteristic of previous bullish trends and has historically signaled a good buying opportunity. "

 

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