Miner exchange flows have signaled changes in Bitcoin’s price rally in the current market cycle and the previous bull run in 2020 and even in the case of the bull run of 2017. It may seem intuitive that miners are sellers on spot exchanges. However, based on inflow from miners and their activity across Huobi and Binance, the top two exchanges that get the most inflow from mining pools, miners have emerged as buyers as well. With a strong presence in Asia, miner outflow was dominant and this indicates that miners are buying on Binance and Huobi.
Bitcoin exchange outflow to miners || Source: Coinmetrics
The above chart indicates the outflow of bitcoin from spot exchanges to miners, and an increase in outflow indicates an increase in buying from miners. On Huobi, Binance, and Gemini the outflow of miners has increased from 2019 to January 2021, gradually.
With regard to inflows from miners, Huobi tops the exchanges whereas Binance has a near equal share in both inflow and outflow. Miner outflows signal HODLing and given the transition in the HODLing pattern in the current market cycle, there may be support for Bitcoin’s price above the $50000 level.
Source: Cryptoquant
Based on data from Cryptoquant, Binance Netflow continues to remain positive at 2680k on Feb 23, 2020. The chart shows that Binance outflow is positive now, after a major drop in Bitcoin outflow earlier in February 2021. The Netflow is relatively low compared to the last two days and this signals that purchases from miners increases the demand on spot exchanges, reducing the selling pressure.
Thus purchase from miners has supported Bitcoin’s price above the $50000 level, ensuring volatility and liquidity. Buying from miners has supported the price above $50000 having a positive impact on the trader’s portfolio and leading to unrealized profits. This adds to the bullish narrative, and as institutional demand increases, it is expected that the netflow may drop further.
Stablecoin inflows to exchanges have reduced over the past two weeks and miner inflow and outflow have had a direct impact on Bitcoin’s price and the overall market capitalization of cryptocurrencies.
