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In the first two weeks of June Bitcoin experienced a 45% drawdown which saw a market-wide route as the total market capitalisation of the sector slipped below a trillion dollars. The depressed market conditions have also adversely hit Bitcoin mining profitability, with some miners having to liquidate their inventory to pay for costs.

Fresh data from Arcane research revealed that public Bitcoin mining companies offloaded 100% of their BTC production in May, an unusually massive spike in comparison to the normal 20%-40% in previous months.

From January till April, miners sold 30% of their mined production. This figure increased by three-fold in May.

Bitcoin: Miner month-on-month selling

While public BTC miners only make up around 20% of the total network hashrate, their behaviour indicates sentiment among private miners. Since miner behaviour depends on energy and bitcoin prices, they’re often regarded as one cohort. Collectively, miners hold 800,000 BTC, making them one of the largest ‘aggregate whales’ in the market. From these, around 46,000 are held by public miners.

Miner outflows increased significantly on April 2, when BTC traded at $45,000. Since then, Miners’ Position Index (MPI) witnessed an overall decrease, but remained in positive territory, per data from Cryptoquant.

Bitcoin: Miners’ Position Index (MPI)

Miners’ Position Index (MPI) is the ratio of total miner outflow (USD) to its one-year moving average of total miner outflow (USD). A higher value shows that miners are sending more coins than usual, which could indicate selling behaviour.

Miner Capitulation Underway

The increased selling pressure has also triggered a ‘capitulation signal’ on the Bitcoin Hash Ribbon. The indicator assumes that Bitcoin tends to reach a bottom when miners sell in bulk. This tends to happen because mining operations become too expensive, so some mining companies become forced Bitcoin sellers.

Bitcoin: Hash Ribbon

The distress signal flashed on June 8 as miners continued emptying inventories en-masse in a low-demand environment.

Bitcoin has recovered 16% since hitting the local bottom of $17,578. The coin currently exchanges hands above $20,500 as the market licks its wounds after a series of cataclysmic events triggered by the Luna Foundation sent prices tumbling for 11 straight weeks.


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