On-chain data shows that Bitcoin miners have been increasing their selling pressure recently, a sign that may not be ideal for the price rally.
Bitcoin MPI Has Surged To Significant Levels Recently
As pointed out by an analyst in a CryptoQuant Quicktake post, BTC could be at risk of a price correction due to a selloff from the miners. The on-chain metric of relevance here is the “Miners’ Position Index” (MPI), which measures the ratio between the Bitcoin miner outflows and its 365-day moving average (MA).
When the value of this metric is greater than 1, it means the miners are transferring a higher amount of coins out of their wallets than the average for the past year.
The main reason why these chain validators withdraw tokens from their addresses is for selling-related purposes, so the indicator showing this trend can imply that this cohort is selling at a higher degree than usual.
On the other hand, the metric being under the 1 mark suggests the miners aren’t participating in much selling as their outflows are sitting at values lower than the norm.
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 been high in recent days | Source: CryptoQuant
As displayed in the above graph, the Bitcoin MPI has seen a sharp increase recently, indicating that the miner outflows have shot up well past the yearly average.
Historically, miners have had a constant presence as sellers in the market, as the nature of BTC mining means that they require a consistent cash flow in order to pay off their running costs like electricity bills.
Most of the time, the degree of selling from this group is low enough that the market can readily absorb it, so the price doesn’t really feel any visible bearish effects.
The recent spike in the MPI, however, would suggest extraordinary selling pressure from the miners, which can indeed be a concern. At present, the indicator is sitting at a value of 3.5, which implies the latest miner outflows are 3.5 times the average for the past year.
This jump in the indicator has come as Bitcoin has been in price-discovery mode, setting record after record. As such, it’s not particularly odd that miners would decide to participate in a selloff right now.
From the chart, it’s visible that the MPI had also registered a huge spike during the last bull market, but interestingly, it didn’t coincide with the rally top. Rather, it occurred alongside a local top just halfway through the run.
As such, if the current spike in the indicator also leads to a top for Bitcoin, it’s possible that it may not be the cyclical top just yet.
BTC Price
At the time of writing, Bitcoin is trading at around $87,700, up around 18% over the last seven days.
Looks like the value of the coin has gone through an uplift recently | Source: BTCUSDT on TradingView
