Bitcoin outflows from miner wallets have spiked, with the majority of coins finding their way onto cryptocurrency exchanges.
The net flow of coins into or out of miner addresses fell to -2,935 BTC on Tuesday to hit the lowest level since June 2019, according to data source Glassnode. To put it another way, miner wallets witnessed the highest outflow of coins for a year.
“There has been a big spike in miner outflows overnight, I’m expecting a whole lot of selling, starting real soon,” popular cryptocurrency analyst Cole Garner tweeted, along with a chart from blockchain analysis firm CryptoQuant showing a big spike in the miner outflow around 10:00 UTC on Tuesday.
However, the Miner’s Netflow Volume does not tell us whether coins have been sent to exchanges for liquidation or sold off in an over-the-counter deal.
However, another metric, which tracks the flow of coins from miner wallets to cryptocurrency exchanges, shows nearly 97% of the total outflow of 2,935 BTC from miner addresses was deposited to cryptocurrency exchanges on Tuesday.
The total 2,844 BTC that went to exchange platforms was the highest since March 26. That’s a major spike: on Monday, only 404 BTC were deposited on exchanges.
With the sudden rise in the number of coins available on exchanges for liquidation, the cryptocurrency looks vulnerable for a notable price drop. Such spikes in miner outflows have preceded price drops in the past, although they don’t necessarily mean a drop is on the way.
For example, outflows increased from 380 BTC to 1,824 BTC on Aug. 2, 2019, but the cryptocurrency extended its recovery rally to hit highs above $12,300 on Aug. 6.
It remains to be seen if the latest spike in miner outflows yields a notable price drop or traps bears on the wrong side of the market. Supporting the case for a downside move is the fact that miners have spent less than they mined in the last 24 hours, pushing miners’ rolling inventory (MRI) above 100%, according to ByteTree.com.
Miners typically hoard coins when they feel the market lacks strength to absorb their offers.
At press time, the cryptocurrency is trading near $9,350, a 3% drop on the day. Prices are trapped in the range of $9,000 to $10,000 for the fifth straight week.