On-chain data shows that Bitcoin miners have recently increased their selling pressure, something that may be bearish for the price.
Bitcoin MPI Recently Touched Highest Levels Since January 2021
An analyst in a CryptoQuant Quicktake post explained that the Miners’ Position Index has recently observed a sharp spike. The “Miners’ Position Index” (MPI) refers to a metric that keeps track of the ratio between the Bitcoin miner outflows (in USD) and the 365-day moving average (MA) of the same.
The “miner outflows” here are a measure of the total amount of the cryptocurrency that’s exiting the combined wallets of all chain validators (called the “miner reserve“).
Generally, the main reason why this cohort transfers coins out of their addresses is for selling purposes, so the miner outflows may provide hints about the amount of selling pressure they are applying to the market right now.
When the value of the MPI is greater than 1, it means that the miners are potentially selling at a greater rate than the average for the past year. Such a trend can naturally be bearish for the asset.
On the other hand, the indicator being below the mark implies the miners are participating in a relatively low amount of selling, which can be either neutral or bullish for BTC.
Now, here is a chart that shows the trend in the Bitcoin MPI over the last few years:
The value of the metric appears to have spiked to high levels recently | Source: CryptoQuant
As displayed in the above graph, the Bitcoin MPI has registered a large spike recently, suggesting that the miners have possibly been selling significantly more than the recent norm.
The metric’s peak at the peak of this surge was the highest it has observed since January 2021, when the bull run was starting to take off.
Miners have to regularly sell some of their Bitcoin as they have constant operating costs in the form of electricity bills. Generally, their selling scale isn’t too great, so the market can readily absorb it.
Because their selloffs are so regular, the raw data of the outflows themselves may not be that helpful, which is why the MPI compares them to the miners’ yearly average behavior for determining whether the selling is significant or not.
As the Bitcoin MPI has hit pretty high levels recently, it would appear that the miners are now indeed selling at a rate that can be relevant for the market. Back in January 2021, when a larger spike was registered, the miners could not impede the price in the long term, although a local top did follow.
During the April 2019 rally, though, the rally top was encountered not too long after these chain validators ramped up their outflows. Which of the two scenarios will play out following the recent MPI spike remains to be seen.
BTC Price
Bitcoin has consolidated during the last few days as its price is still trading around $43,100.
Looks like the price of the asset has been moving sideways recently | Source: BTCUSD on TradingView