Bitcoin (BTC) has gotten stuck in the mid $70,000 range, down about 4.6 percent over the past week. While some analysts believe that the top cryptocurrency has already established its bottom for this cycle, mining data suggests otherwise.
Bitcoin miner action suggests bottom not in yet
The Bitcoin Pool Miner Reserve is showing a decline, indicating that miners are continuing to reduce their BTC holdings. The current fall in BTC reserves shows that miners are still feeling the burden of operational selling pressure.
For the uninitiated, the Binance Pool represents a significant share of the global Bitcoin hash rate. As a result, its behavior tends to reflect the psychology before the broader market reacts.
The Miner Position Index (MPI) is currently in the negative territory, showing that Bitcoin miners are not quite selling as aggressively compared to historical averages. In simple words, these miners, at least for the time being, are not in panic selling mode.
To explain, the MPI measures how much Bitcoin miners are sending to exchanges or selling compared to their historical average. A high MPI suggests miners are aggressively selling, while a low or negative MPI indicates reduced selling pressure.
At present, the selling appears to be necessity based, suggesting the likelihood of a sharp market dump is relatively low. The Puell Multiple supports this view too.
As of Thursday, the Puell Multiple is below 1, confirming that the miner revenues are still under pressure. However, it also means that miners are not aggressively accumulating BTC just yet, as it hasn’t shown a strong bullish breakout yet.
It would be apt to say that Bitcoin miners are currently in a wait phase. Typically, such type of miner behavior is seen before market bottom formations – implying that miners still don’t feel that BTC has bottomed yet.
What is the implication for BTC price?
From a price perspective, the current structure shows that BTC’s short-term pressure has not completely disappeared.
The decline in miner reserves shows that while BTC supply is still entering the market, the MPI being weak suggests that these sales are not large enough to trigger a collapse.