Bitcoin miners used to be the biggest cryptocurrency dumpers when their price was trading near the all-time high. Even so, their sentiment has changed dramatically on the recent price rally.
Data pulled from Glassnode, an on-chain market intelligence platform, shows that miners are not spending their bitcoin as usual. It was based on its proprietary indicator called Miner Outflow Multiple, which measures Bitcoin withdrawals from miners’ wallets over an average of seven days.
The readings showed that miners were spending BTC above the known historical average, but not as much as they were at previous highs.
“The miner outflow multiple, which shows when the BTC miner outflow is high compared to the historical average, is far from previous highs and even below the local high of 2019,” commented Glassnode.
The mining psychology
Miners are at the forefront of bitcoin production. You will review and add blocks to the Bitcoin blockchain and receive Bitcoin rewards in return. They prefer to sell these units on the open market to pay for their running costs (mining equipment, electricity, etc.).
Meanwhile, miners are also becoming investors by choosing to hold a portion of their Bitcoin premiums to speculate on their worth. Your decision effectively reduces the supply of cryptocurrency in retail. This plays an important role in determining the BTC / USD price per fluctuating demand.
A higher Bitcoin price gives miners plenty of reasons to sell their stocks. It did so in 2019 when BTC / USD hit an annual high near $ 14,000. This also happened in 2017 when the pair closed against $ 20,000.
Bitcoin price is trading near its all-time high of $24,300. Source: BTCUSD on TradingView.com
However, in 2020 miners are showing relatively little interest in losing their positions, despite the fact that BTC / USD closed above $ 24,000 for the first time in history. So it seems that a lot of them want to stick with their BTC investments. That gives a bullish picture for Bitcoin based on Supply deficit.
If more miners choose to hold Bitcoin instead of selling it, there will be a supply deficit. This should automatically improve the cryptocurrency’s bullish bias against booming demand from institutional investors.