Key metrics indicate that the price of Bitcoin may be near a local top
Bitcoin miners are selling at a level never seen since July 2019, when the price of BTC reached a peak of US$14,000.
Key metrics indicate that the price of Bitcoin may be close to a local MARKET HIGHLIGHTS
According to CryptoQuant data, the miners appear to be selling Bitcoin Profit large quantities of Bitcoin (BTC). Historically, the increased sales pressure from the miners has marked a local top and led to acute and prolonged corrections.
1 hour BTC / USDT chart. Source. Source: TradingView.com
Why are miners selling?
In May 2020, Willy Woo, a network analyst, said that there would be two sources of unrivalled selling pressure in the market after the bloc’s reward fell by half.
Woo identified Bitcoins miners and crypto exchanges that sell the fees they earn in the form of digital assets as the sources of selling pressure. He said:
„There’s only two unmatched sell pressures on the market. (1) Miners who dilute the supply and sell onto the market, this is the hidden tax via monetary inflation. And (2) the exchanges who tax the traders and sell onto the market.
Therefore, in the short to medium term, mining companies can continue to serve as an important source of selling pressure on Bitcoin.
Based on CryptoQuant data, the Miner’s Position Index (MPI) has increased significantly in recent days.
Bitcoin Mining Position Index (30 days). Source CryptoQuant
On 10 January, the MPI reached a level that is at the same level as July 2019, when the price of the BTC fell rapidly below US$14,000. Ki Young Ju, the CEO of CryptoQuant, said:
„The Miner’s Position Index seems enough to make a local top. They are selling $BTC. I’m going to launch a small sale to climb $BTC in this short term down market. Since December last year, they were selling $BTC, but the correction was small due to institutional purchasing power. ”
Ki later commented that he closed the selling position, emphasizing that the correction did not last long.
It is possible that buyer demand from the US is outstripping the miners‘ selling pressure. This theory is supported by the recent trend of Bitcoin price trading with a higher premium in Coinbase than in other major exchanges such as Binance.
What traders expect in the short term?
Some traders expect Bitcoin to see a bigger downturn in the short term. Edward Morra, a cryptomaniac trader, said a possible scenario is a slow correction to around $36,000.
Morra noted that the Bitcoin scenario falling to $36,000 is unlikely, but it would be a „typical bullish market thing“. He wrote:
„I think it’s an unlikely scenario, but I see some resemblance to the transition from Sunday to Monday last week. By the way, it is very optimistic to set the week’s low on Monday and then expand, a typical bullish market thing. ”
Philip Swift, the creator of LookIntoBitcoin, said that although Bitcoin is unlikely to shrink by 30%, the rate of appreciation may decline. This could lead to a slower boost for the BTC, especially as it will retest the $42,000 resistance level in the near future. He explained:
„One point of clarification, as there seems to be some misunderstanding. I don’t think BTC $ is about to fall + 30%, I think/acho that the rate of price appreciation may decrease in the short term. ”