Historical data shows that some miners started selling Bitcoin (BTC) at the end of July, resulting in increased selling pressure in the cryptocurrency market.
Eventually, the dominant cryptocurrency fell sharply from mid-August, dropping 13% and since then BTC has struggled to regain the $ 12,000 mark.
Sale of bitcoins by miners from 2017 to 2020. Source: CryptoQuant
According to CryptoQuant CEO Ki Young Ju, further selling by miners may not be enough to prevent a bull run. On-chain data analytics companies closely observe the movements of miners and whales as they hold significant amounts of BTC.
Willy Woo, a chain analyst, explained that miners represent one of the two external sources of selling pressure for Bitcoin. He said previously:
“There are only two unmatched selling pressures in the market. (1) The miners who dilute the supply and sell on the market, it is the hidden tax via monetary inflation. And (2) the exchanges that tax traders and sell in the market. “
When miners start selling their Bitcoin holdings, usually to cover expenses, it could trigger a correction in the cryptocurrency market.
For example, from August 17 to September 5, the price of Bitcoin rose from $ 12,486 to $ 9,813. During this time, several whales sold Bitcoin for $ 12,000 and the same behavior was seen among miners.
The selling pressure from miners and whales has been notably attributed to the current crisis in the crypto market, but in the longer term, Ki explained that it was not enough to stop a prolonged bull run.
If miners suddenly sell a significant amount of BTC, it could lead to a severe correction as a slight price movement could trigger sellouts from heavily indebted traders. Therefore, even a relatively small sale by miners could theoretically cause massive price fluctuations.
Ki says the intensity of the miners selling was not strong enough to stop future bull runs. He said:
“Miners update: Some miners started selling at the end of July, but I think in the long run miners haven’t sold enough BTC to stop the next bull run.”
According to ByteTree, the net inventory of Bitcoin miners has declined by 125 BTC per week over the past 12 weeks. Data shows that miners sold around $ 1.362 million worth of BTC per week on top of the BTC they mined and sold.
Amount of BTC mined and sold in the past 12 weeks. Source: ByteTree
As Ki pointed out, the data shows that the miners sold substantial amounts of BTC, but not in amounts that were inconsistent with normal behavior.
Post-halving bull cycle remains a possibility
Bitcoin is still hovering above the critical $ 10,000 tech support level despite multiple attempts by the bears to push the price below the key level.
Bitcoin’s resilience amid an increased level of selling pressure suggests a cautiously long-term bullish trend.
The short-term holder of Bitcoin NUPL. Source: Glassnode
Several on-chain metrics also indicate that this is now a healthy build-up phase for Bitcoin. Rafael Schultze-Kraft, Technical Director of Glassnode, said:
“Short Term Carrier Net Unrealized Profit / Loss (STH-NUPL) with a bullish signal here imo. This rebound from the 0 line was significant, is very characteristic of previous bull markets and historically constitutes a good buying opportunity.