One of the best ways to be successful as a bitcoin trader is to spot potential trends before they occur, or in their early stages.
Such an advantage could be quite handy now that bitcoin and the rest of the cryptocurrency market are in a phase of rapid recovery.
In the case of bitcoin, keeping a close eye on mined reserves can be beneficial as far as selling pressure is concerned.
Bitcoin miners usually reserve their bitcoin earnings in anticipation of higher prices. When the price of bitcoin is high enough to trigger a significant profit, they can cash out.
Many of the dynamics involved in bitcoin mining, such as the cost of mining equipment, and the cost of electricity, can change at any time.
Unforeseen or unfavorable increases in mining costs reduce profitability.
This forces miners to sell more of their reserve BTC to cover their running costs.
This often triggers more selling pressure depending on the amount of bitcoin from miner reserves.
Well, Bitcoin miner revenue metrics on Glassnode highlighted a significant drop in miner revenue over the past seven days.
The miner’s revenue peaked at 1,019.80 BTC on 6 August and fell to 880.31 BTC by 13 August.
Bitcoin miner reserve metrics on CryptoQuant showed that there has been an outflow over the past few days. Interestingly, the outflow began on August 6th, the same date that bitcoin miner revenue began to decline.
Between August 6 and 13, approximately 3,953 BTC were transferred from bitcoin miners’ reserves.
Sell pressure?
Well, when the miner reserve outflow started, bitcoin was trading above $22,800. Since then its value has been appreciated. If we use the above BTC price to calculate the value of offloaded BTC, it is worth over $90 million.
This is approximately 0.019% of bitcoin’s market cap at press time.
The amount of offloaded BTC is very less compared to the bitcoins available on the exchanges. So it may not have much effect on the price of BTC.
However, extended outflows could trigger a broader impact, including FUD, in the market, leading to more outflows.
Under such circumstances the king coin would experience increased selling pressure, but this remains to be seen. However, it does underscore a potential risk that could dampen the ongoing rally.