Bitcoin miner reserves drops, bearish signs emerge
The quantity of Bitcoin (BTC) held in reserve by mining companies has reached lows last seen in October 2022.
Miner reserves important in bitcoin market
According to on-chain analytics company CryptoQuant, bitcoin miners only had 1.83 million BTC in their wallets as of March 9, dipping below the previous low of 1.91 million BTC recorded on Oct. 12, 2022.
CryptoQuant employs a machine learning (ML) technique to detect miner wallet addresses and track their holdings. It includes wallets associated with miners or mining pools that amass BTC but do not actively mine it.
The sum of the bitcoin held in those wallets is what the analytics firm calls “miner reserve,” and it’s an important indicator for BTC prices.
When this indicator’s value climbs, it means miners are adding more BTC to their wallets, and when it drops, it means they are selling off their holdings. Typically, the bitcoin price may fall whenever the indicator exhibits a selling tendency like it is now.
Because of the large quantity of bitcoin miners hold, miner selling patterns significantly impact the broader crypto market.
Miners looking to profit from recent price surge
According to CryptoQuant, despite several on-chain metrics showing encouraging signs, the miner reserve indicator is pointing towards a more bearish trend, especially considering it has reached new yearly lows.
The BTC miner reserve has been declining since the cryptocurrency’s price started going up. It suggests that miners saw the price increase as a profitable exit opportunity to compensate for decreased profits as the market suffered.
Miners typically sell portions of their holdings to cover ongoing operating expenses such as electricity bills. Large selloffs, on the other hand, can indicate that they are struggling more than usual to make ends meet.
Per CoinMarketCap, bitcoin’s price has shot up by more than 45% since the start of the year. Miners have taken advantage of the short bull run and improved BTC prices to offload some of their holdings to offset high expenses caused by a jump in global energy prices and severe network conditions.