Bitcoin on-chain data has shown miners have started selling more BTC on exchanges, an indicator that a bear market might be ahead.
Miners to Exchanges Flow has risen sharply
As can be seen from a CryptoQuant article, the flow average of all miners to all exchanges for Bitcoin seems to have risen sharply over the past weekend.
There are three basic concepts to data. The first is the total flow of all miners to all exchanges, which shows the total number of coins sent to the exchanges by miners.
The next term is the transaction counter flow, which is the number of bitcoin transactions made from mining pools to exchanges.
Finally, there is the flow average, which is defined as the average amount of BTC transferred by miners to exchanges and is calculated by dividing the flow total by the number of transactions. This indicator is the focus here.
Bitcoin All miners to all exchanges Flow Mean = Flow Total ÷ number of transactions
Now here is a graph showing how the value of the indicator has changed over the past year:
The indicator seems to have risen recently | Source: CryptoQuant
As the graphic shows, the flow average of all miners on all exchanges reached its highest level since November 2020 on the weekend.
There were other minor spikes over the past month as well, with the average bitcoin transfer exceeding 60 BTC. The highlight of that Saturday was almost 100 coins in size.
The mining environment is currently somewhat special due to China’s raids, and it is possible that the value of the indicator will rise as miners move to other countries and resume operations.
If the value of the indicator rises, it means that more miners are transferring their BTC to exchanges for sale purposes.
Since these are fairly large volumes, the miners’ selling pressure can affect the entire market.
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Hence, the rising value can be bearish for the market. However, it should be noted that this does not necessarily have to result in a drop in the price.
There have been cases in Bitcoin’s history where the miners flow to exchange, meaning the surge did not result in a crash. For example, the price only increased further after the increase in November 2020.
At the time of writing, the BTC price is around $ 30,700, which has fallen nearly 8% in the past 7 days. Here is a graph that identifies the trend in crypto value:
Bitcoin appears to be in a downtrend | Source: BTCUSD on TradingView
BTC continues to be stuck in an area-bound market as the price of crypto hasn’t moved much in the past few weeks.
Related reading | Why Bitcoin and Crypto Bulls require more patience
It’s unclear when the market will head in any particular direction, but if the flow of miners to the exchanges is something to watch out for, there could be a bearish turnaround soon. However, as already mentioned, this does not necessarily have to be the case.