Bitcoin’s price is determined more by miners than investors realize. The price miners are willing and able to sell bitcoins is often related to the profit they can make by selling the coins that they mined. Miners can choose to sell or hold an asset depending on its price. This could have an impact on the bitcoin market price.
The number of short-term Bitcoin holders hits an all-time high, how it affects the price| The number of short-term Bitcoin holders hits an all-time high, how it affects the price
Profitability is the main reason that mining exists. When profitability falls, miners either sell and reduce their losses or they can wait for the price of their coins to rise. According to the Puell Multiple minors choose the former. Keep their parts, not sell for lower profitability.
Miners’ profitability drops
Data shows that miners’ profitability is down since bitcoin was last sold at this price. Bitcoin’s April profitability at $ 50,000 was 40% more than it was when it hit $ 50,000 again. This means that miners’ profitability is at an all-time high.
Miners have refused to sell the BTC that they were rewarded for mining blocks, owing to this drop in profitability. Instead, you can keep those coins and wait for higher prices.
Source:| Source: CryptoQuant
The Miner Position Index, (MPI), shows us the ratio between bitcoins leaving miners’ wallets and the one-year moving mean. The miners’ position index has shown that this number has fallen to a negative 0.405 for the year. A miner index of 2 or greater means that most miners have sold their coins. Below 2 means that some miners are selling. However, a negative number of 0.404 means that almost all miners do not sell their coins.
Bitcoin price plummets as miners refuse sell
Bitcoin’s price has been trending upwards for the majority of the weekend. Market sentiment turned to extreme greed and the price of Bitcoin finally broke through at $ 50,000 on Monday. The price of bitcoin quickly entered a correction, bringing it back to the $ 47,000 mark. It took a long and hard-fought battle to push the price above the resistance. The current price drop means that the entire process must be repeated.
Source:| Source: TradingView.com - BTCUSD
The digital asset saw another uptrend Wednesday, putting it back on track to regain its position above $ 50,000. The indicators show that bulls still control the market. Despite the drop in market value, emotions did not change. As institutional and individual investors vie for positions in the top cryptocurrency, buying pressures remain constant.
Related reading: Why an 18% decline in Bitcoin could still prove to be bullish| Why an 18% drop in Bitcoin could still be bullish
Despite this, miners don’t find this item profitable to sell. It’s not surprising that miners are choosing not to sell their coins due to high price projections, which could reach over $ 100,000 by year end.
Featured image by Bitcoin News, chart from CryptoQuant, and TradingView.com