The cryptocurrency markets show minor signs of a potential market recovery, although there will still be some minor volatility. One crucial metric indicates Bitcoin may see less selling pressure from miners cashing out. However, the exchange reserves continue to increase, which can become counterproductive.
Bitcoin Miners Are Selling Less
It is always crucial to gauge the broader landscape and look beyond the current price per BTC. Although the price is a viable metric, numerous factors contribute to this number either going up or down. Figuring out what makes the BTC price tick can often yield surprising insights and helps people get a better overview of how these decentralized currencies behave under market conditions.
With Proof-of-Work networks like Bitcoin and Ethereum, there are always concerns regarding the miners. As these users receive block rewards and transaction fees in exchange for securing the network and validating transfers. As the value of BTC goes up, mines make more money, making them less prone to sell. However, during bear markets, like the current one, that situation can be very different.
Per the Puell Multiple / Miner Profitability metric by CryptoQuant, it appears miners are no longer selling BTC in large quantities. More specifically, the metric has hit a multi-year low, indicating there is no reason for miners to sell their holdings and earnings. Additionally, this can decrease the overall liquidity across exchanges, as withdrawals should begin to outpace deposits once again.
As interesting as this metric is, it is not a definite indicator of a Bitcoin market reversal. Although the prices are moving up again, there is still no stable support level above the $32,000 range to speak of. Thus, more volatility is likely to occur in the coming days and weeks, albeit volatility can also trigger a price increase. Markets will always be unpredictable, no matter how much analysis traders and speculators perform.
Exchange Balances Keep Rising
On paper, one would expect the decrease in miner deposits to make a relatively quick impact. In reality,that process will often take days or weeks to become noticeable. Per Viewbase, there is still an ongoing increase in BTC exchange balances, despite the miner outflow slowing down as of late.
Such a development is not too surprising, as many people managed to buy Bitcoin below $30,000 and will now begin to look for profits. A quick $6,000 profit per BTC is hard to pass up on, particularly when considering how there may be future dips unless the market turns around all of a sudden. Traders will win either way, even if they may not necessarily maximize their profits.
The current exchange inflow is still close to 3,700 BTC per day despite miners seemingly depositing less Bitcoin. A substantial amount, as nearly no platforms note any outflow worth paying attention to. For today, a negative flow of 80 BTC is the highest, whereas the top inflow is 2,570 BTC. There is still plenty of liquidity capable of triggering more volatility for Bitcoin, regardless of the current momentum.