Bitcoin in Downtrend
After another week of turbulent market volatility, the cryptocurrency market saw severe drops with Bitcoin (BTC) and its peers plummeting nearly 25% from recent highs. This selloff caught many speculators and traders off-guard, causing a panic reaction across the market.
The Crypto Fear and Greed Index shifted from a weekly high of 94 back down to a more modest 55. However, analysts have reiterated that minor corrections are both necessary and organic, as Bitcoin looks to consolidate around its hard support levels.
Analyzing Miners Net Position Change
For the first time since late December of last year, Bitcoin miners’ net position change reverted back to positive. Some analysts have seen this renewed accumulation by miners as a bullish indicator, citing that the recent selling pressure may subside. Still, it’s unclear whether decreased selling from mining pools will leave a noticeable impact on Bitcoin’s price.
Historically, there has been little correlation between Bitcoin price and miner behavior. Research from Clain, a Crypto analytics company, supports this claim further. There was no proven statistical significance between the price action and the volume of Bitcoin that miners sold to exchanges–at least up to 2019.
“The only sizable correlation that we were able to detect was a correlation between USD value of flows and the BTC price. The USD flow variable is a derivative of BTC price, so it factors in a huge deal of BTC price itself and thus shall not stand for a fair relationship. Dismissing that strong correlation, we are left with no interesting insight.”
It’s certainly possible that positive net positions are a sign that miners see Bitcoin’s current price levels as undervalued. With more corporations like Tesla, Square, and MicroStrategy adding Bitcoin onto their balance sheets, future growth prospects for the cryptocurrency space and mainstream adoption seem almost set in stone.
However, based on historical data and past research, it would be a mistake to suggest that the sudden accumulation by miners will directly serve as a catalyst for another breakout rally.
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