Bitcoin miners (BTC) are selling less and less BTC, but if the calculation is correct, they may soon start making a significant price correction.
In a March 11 update, Philip Swift, creator of LookIntoBitcoin, noticed the known warning signs from the Puell Multiple.
Developed by David Puell, Puell tracks the many times when miners would likely start selling in order to profit from joining the Bitcoin network.
Divide the daily “new” BTC value by issuing one-year moving averages, in US dollars, to get an idea of where sales will be most profitable for miners.
A look at the historical multipliers shows that rallies – when the value enters the upper red zone on the chart – coincide with bitcoin price peaks and subsequent sales.
For Swift, with the variety now closer to the red than it has been since late 2017, the risk is clear.
He summarized in the comments to the historical chart: “The Paul multiplier, which compares production today to historical rates, is approaching the red overbought range”:
“Historically, when the Puella multiplier (red line) breaks through the upper red band, it coincides with large overall dollar price hikes of BTC as miners start to profit.
Bitcoin Puell Multiple Chart for BTC / USD. Source: LookIntoBitcoin
In 2021, the chart was based on a new phenomenon that only started at the end of 2017 – institutional investment in Bitcoin. This year was marked by major institutional purchases, and as Swift notes, the question now is whether miners will still be able to break the market despite their desire for HODLing.
Associate analyst Cole Garner responded with data from network analytics service Glassnode, which also shows bitcoin price adjustments after large inflows from the pool this year.
“This chart shows that they have done a very good job at dumping the price or that they are smart money and know exactly when to sell,” he commented.
The outflow remains low
However, the general desire to sell among miners is low compared to previous years.
In its most recent weekly report, crypto stock index tracker Stack Funds highlighted the fact that the flow of funds from mining pools, on average, in seven days, is the lowest since 2016.
Capital outflows fell below long-term support that year, which again fell into an uptrend to $ 20,000 over the next two years.
“It happened twice, just last year, in May 2020 and at the end of January of this year,” Stack wrote.
“The double breach also confirms that mining operations are likely to remain low, which could spur higher prices.”
Bitcoin mines expire on 7-day average chart (with commentary) versus BTC / USD. Source: Stack Funds
As expectations of further growth continue to grow, researchers also believe that potential sex suppression should return anyway. According to Cointelegraph, the most likely worst-case scenario is $ 46,000, which is Bitcoin’s strongest support since it crossed $ 11,000 last year.
“Overall, most fundamental indicators are that miners are piling up and we expect $ 50,000 to be a strong pillar of Bitcoin in the short term,” the report said.