Key metrics indicate that the price of Bitcoin may be near a local top

Bitcoin miners are selling at a level never seen since July 2019, when the price of BTC peaked at $14,000.

Market analysis

According to CryptoQuant data, the miners seem to be selling large quantities of Bitcoin (BTC). Historically, the increased sales pressure from the miners has marked a local top and led to acute and prolonged corrections.

Why are mining companies selling?

In May 2020, Willy Woo network analyst said there would be two sources of unparalleled selling pressure in the market after the bloc’s reward fell by half.

Woo identified Crypto Genius miners and cryptomoedas exchanges that sell the fees they earn in the form of digital assets as the sources of selling pressure. He said:

„There’s only two unmatched sell pressures on the market. (1) Miners who dilute the supply and sell onto the market, this is the hidden tax via monetary inflation. And (2) the exchanges who tax the traders and sell onto the market.“

Therefore, in the short to medium term, mining companies can continue to serve as an important source of sales pressure on Bitcoin.

Based on CryptoQuant data, the Miner’s Position Index (MPI) has increased significantly in recent days.

Bitcoin Mining Position Index (30 days).

On January 10, MPI reached a level that is at the same level as July 2019, when the price of BTC fell rapidly below $14,000. Ki Young Ju, the CEO of CryptoQuant, said:

„The Miner’s Position Index seems enough to make a local top. They are selling $BTC. I’m going to launch a small sale to climb $BTC in this short term down market. Since December last year, they were selling $BTC, but the correction was small due to institutional purchasing power. ”

Ki later commented that he closed the sales position, emphasizing that the correction lasted little.

It is possible that the buyer’s demand from the US is overcoming the miners‘ selling pressure. This theory is supported by the recent trend of Bitcoin price trading with a higher premium in Coinbase than in other major exchanges such as Binance.

What traders expect in the short term?

Some traders expect Bitcoin to see a bigger downturn in the short term. Edward Morra, a cryptomaniac trader, said that a possible scenario is a slow correction to around $36,000.

Morra noted that the Bitcoin scenario falling to $36,000 is unlikely, but it would be a „typical bullish market thing“. He wrote:

„I think it’s an unlikely scenario, but I see some resemblance to the transition from Sunday to Monday last week. By the way, it’s very optimistic to establish the week’s low on Monday and then expand, a typical bullish market thing. ”

Philip Swift, the creator of LookIntoBitcoin, said that although Bitcoin is unlikely to shrink by 30%, the rate of appreciation may decline. This may lead to a slower impetus for BTC, especially as it will retest the $42,000 resistance level in the near future. He explained:

„A point of clarification, because there seems to be some misunderstanding. I don’t think $ BTC is about to fall + 30%, I think/acho that the rate of price appreciation may decrease in the short term. ”