Miner wallets witnessed the biggest outflow of bitcoins yesterday, since June 2019.
The net flow of bitcoins to or from miners’ wallets fell by -2,935, and it appears that most of them found their way to exchanges, so will this lead to a market sell off?
Will It Lead To a Market Sell Off?
Miners typically hoard bitcoins when they feel the market lacks strength, so a spike in the outflow is a surprise.
‘There has been a big spike in miner outflows overnight, I’m expecting a whole lot of selling, starting real soon,’ said crypto analyst Cole Garner.
‘This is probably an OTC deal since the flows don't appear to be going to an exchange. I'd be more concerned if they were going to an exchange — still, miners moving a lot of coins is never a good sign.’
Well, according to Glassnode, 97% of the BTC sent from miner wallets were actually sent to crypto exchanges, the highest since March 26 and up 700% from the day before.
All this BTC moving to exchanges might lead to a sell off, but who’s to say they wont be sold OTC?
Big players are wanting BTC, and with Grayscale’s consumption of late – buying more than 1.5 times the amount of minted BTC since the halvening, there are few bitcoins to go around on the OTC market.
Either way the amount of bitcoins sent to exchanges does leave doubt lingering and the price of BTC is starting to look vulnerable, dropping 3% today down to $9,300
However, previous spikes in miner outflows have sometimes led to price drops in the past, but not always.
On August 2 last year, the outflow of miner’s BTC rose from 380 to 1,824, but the BTC price kept rising.
And according to BitcoinExchangeGuide, exchanges’ bitcoin balance dropped to the 1-year low of 2,622,984.499 BTC only the day before this miner outflow.
Poolin and HaoBTC are the two mining pools responsible for the majority of the outflow, so it makes you wonder if they are working with the exchanges to top up their low levels of BTC.
If it is for the OTC market it will come as no surprise either. The amount of whale wallets with a minimum 1,000 BTC grew by 15 in just the last 3 days.
And even retail investors look to be accumulating, as the number of wallets not active for over a year has gone above 60%.
Will We See A Sell Off?
It remains to be seen if the miner outflow leads to a market sell off, or whether they have gone to OTC market.
The outflow has surprised most in the space, especially as the market is lacking strength.
With the hodlers wallets growing, however, and more whales getting involved, it’s hard to hypothesize which way the short term price will go, which should only mean one thing: HODL.
Author: Pablo Clarke