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These two Bitcoin chain metrics indicate that the decline has ended after halving

June 8, 2020

Data from blockchain analytics company CryptoQuant suggest that miners are currently sticking to their mined BTCThis is a signal that could point to a continued recovery in Bitcoin price as there is no sales pressure from large mining companies.

The Miners’ Position Index (MPI) provides insights into how miners who change their positions in BTC can affect asset price developments. An MPI value above 2 indicates that miners are selling their BTC after mining, while a negative value indicates that they are avoiding selling as much as possible in favor of accumulation.

Miners' Position Index (MPI) - Source: CryptoQuant

These two Bitcoin chain metrics indicate that the decline has ended after halving
These two Bitcoin chain metrics indicate that the decline has ended after halving

Miners’ Position Index (MPI) – Source: CryptoQuant

The graph above shows an MPI of -0.59 after a slight rebound from the annual low of -0.79 on June 2nd, suggesting top miners are not selling their newly mined coins and instead are expecting a Bitcoin- Cheaper, a scenario that was previously observed.

MPI shows family behavior

In November 2018, a month when the price of Bitcoin dropped from $ 6,500 to around $ 3,700, the miners behaved similarly and chose not to move any currency during the bear market. and choose a higher point of sale.

When the price started to recover in May, June and July of this year, the MPI showed positive values ​​in the three months. The MPI is currently behaving similarly to that in November 2018This shows that miners are not very keen to sell BTC at the current price.

Miners' Position Index (MPI) 2018 and 2020 - Source: CryptoQuant

Miners’ Position Index (MPI) 2018 and 2020 – Source: CryptoQuant

According to Ki Young Ju, CEO of CryptoQuant, an MPI below -0.7 means that large miners will not sell their new coins. Ki Young Ju explained:

“In November 2018, the MPI index dropped from -0.7 and there was a fall in prices. During the economic crisis, they moved no currency and even the MPI index was -1-low. They started selling BTC when the bull market arrived, suggesting that if the IPM index falls below -0.7, the big miners will decide not to sell BTC, which means we are close to the bottom, although there may be further declines . “

Before Bitcoin was halved, similar prices triggered a much higher MPI, but with production costs rising, miners need a higher price to break even.This explains why some smaller mining operations appear to have entered a surrender process in the last week of May.

Miners surrender, but the BTC price remains stable

Bytetree data shows that Bitcoin’s price dropped below $ 9,000 last week in May before rebounding to $ 9,200 on May 27It appears that miners sold more BTC than they mined.

Miners sold 673 BTC more than they mined from May 25-31, resulting in 111.44% Rolling Miners (MRI) inventory.

According to Ki Young Ju, the high MRI was the result of the surrender of some operations. He explained that:

“I think this would only be a temporary crash, as only the unknown miner and the small miners surrender for the time being.”

As the price of Bitcoin continued to recover, even though the miners sold more than they had mined, the sale appears to be the result of the decline in inefficient minersA process that can lead to a more robust and volatile Bitcoin market. Previously, Matt D’Souza, CEO of Blockware Mining, told Cointelegraph:

“After closing, the bitcoin they received will be assigned to the most efficient and experienced miners with excellent margins who will be able to accumulate a higher percentage of the newly minted bitcoin instead of having to sell it, which will significantly reduce selling pressure . “

The current week has been a more positive tone for BTC miners as the number of mined BTCs only exceeded the number of mines by 108. By June 5, the miners had mined 95 BTC more than they had sold.

    Rolling Miners Inventory (MRI) - Source: Bytetree

Rolling Miners Inventory (MRI) – Source: Bytetree

While chain data relating to miners is only a small part of the endless puzzle, Bitcoin’s price isIt appears that efficient miners are sticking to their BTC, as the recovering MRI shows.

The capitulation of inefficient miners can lead to selling pressure at higher prices through more efficient operations, a factor supported by the currently observed low MPI.

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