Bitcoin miners used to be the biggest cryptocurrency dumpers when the price hit near record highs. Nevertheless, their sentiment has changed dramatically during the latest price hike.
Data retrieved from Glassnode, an on-chain market information platform, shows that miners are not spending their Bitcoin beyond normal. It took clues from its own indicator known as the Miner Outflow Multiple, which measures Bitcoin withdrawals from miners’ wallets at an average of seven days.
The measurements on it showed that miners are spending BTC above the known historical average, but not as much as during the previous highs.
“The Miner Outflow Multiple, which shows when the BTC miner outflow is high compared to the historical average, is far from the previous peaks and even below the 2019 local peak,” said Glassnode.
Miners are at the forefront of Bitcoin production. They verify and add blocks to the Bitcoin blockchain and receive bitcoin rewards in return. They prefer to sell those units in the open market to pay for their operating costs (mining equipment, electricity, etc.).
Meanwhile, miners are also turning into investors by deciding to hold on to some of their Bitcoin rewards to speculate on their value. Their decision effectively reduces cryptocurrency supply in the retail market. That plays an important role in determining the BTC / USD price based on the fluctuating demand.
A higher Bitcoin price gives miners plenty of reasons to sell their assets. That happened in 2019 when BTC / USD hit an annual high near USD 14,000. That also happened in 2017, when the pair closed towards $ 20,000.
Bitcoin price is trading near its all-time high of $24,300. Source: BTCUSD on TradingView.com
But in 2020, miners are showing relatively less interest in ditching their positions, even as BTC / USD closed above USD 24,000 for the first time in history. So it seems that many of them want to keep their BTC investments. That paints a bullish picture for Bitcoin based on Delivery shortage.
When more miners decide to hold Bitcoin instead of selling it, a supply shortage arises. That should automatically improve the cryptocurrency’s bullish bias against a booming demand among institutional investors.