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The trend of exposure reduction by major Bitcoin network players continues to deepen even as Bitcoin awaits its next major move.
According to Capriole Investments founder Charles Edwards, Bitcoin miners are "puking" Bitcoin at a rate not seen since the cryptocurrency traded at $19,000. This trend of Bitcoin liquidation typically happens for one of two reasons, which include a margin squeeze whenever they need cash, but this might not be the case at present. The second reason stated by Edwards could be that they are bearish despite being in profit.
Bitcoin’s mining difficulty, a measure of how difficult it is for miners to solve cryptographic puzzles in Bitcoin mining, has recently hit a new all-time high, coinciding with an increase in the hash rate.
This strength alleviates fears about miners’ net outflows or the lack of profitability gains across the sector.
Silver lining
Despite the concerns, there is no evidence that miners are under immediate pressure to liquidate positions.
In his tweet, Capriole Investments Founder Charles Edwards posted a Bitcoin price chart alongside his tweet, which also showed Bitcoin miner inflows.
A trend is deduced when Bitcoin miner netflows dip into the red, and the price reverses direction, often climbing, hinting at a bullish divergence.
Edwards added that in cases where Bitcoin miners' outflows soared, the price was often higher a month later, indicating a hidden bullish signal.
This shows that when Bitcoin flows out from miners, it is being taken up by corporate reserves, which often counter the negative effects. At press time, Bitcoin was up 1% in the last 24 hours to $112,931.
Dan Burgin
Vladislav Sopov
U.Today Editorial Team