According to data cited by analysts of Bitfinex earlier this week, Bitcoin miners are slowing the rate at which they sell their tokens. Referring to on-chain data from the crypto analytics platform GlassnodeBitfinex said “selling is at its lowest level in three years.”
“This is a potential indication that miners are now already in transition or moving into a buying pressure phase,” the analysts continued, adding that miners might “choose to hold their bitcoins because that they anticipate further (price) increases”.
When miners move their BTC to exchanges, it is generally assumed that they are doing so in order to possibly proceed with their sale. Thus, the drop in these flows can be seen as an indicator of a decrease in BTC sales.
Miners provide the computing power needed to power the decentralized, permissionless, peer-to-peer payment network based on the Bitcoin blockchain. They are rewarded for their efforts with newly created BTC. Miners are one of the most important players in the market, indicating that selling pressure at them is generally considered a bullish indicator for the price of BTC.
Another signal of the end of the Bitcoin bear market?
Growing excitement has been seen in recent weeks in light of Bitcoin’s latest price rally (BTC is up nearly 40% this month and back into the $23,000 area) which many see as a harbinger of the end of the bear market. Admittedly, most of the tightening of the Federal Reserve Bank (FED) having apparently already been implemented, the risks are tilted towards an easing of financial conditions in 2023 rather than a repetition of the severe tightening of 2022, a historically bullish macro backdrop for cryptocurrencies.
And miner flows to exchanges are just one of many technical and on-chain indicators signaling that Bitcoin could be entering a new market cycle. A growing confluence of technical indicators tracked by Glassnode analysts in their dashboard”Recovery from a Bitcoin Bear” are in green.
Currently, six of the eight indicators are consistent with the start of a market rally, and a seventh is expected to show positive signs soon. Elsewhere, Bitcoin is currently a “long-term generational buying opportunity” according to six on-chain indicators cited by crypto research Twitter account @GameofTrades_. These indicators include Accumulation trend score, Entity-adjusted dormancy flow, Reserve risk, Realized price, Z MVRV score and the Puell multiple.
Elsewhere, the Bitcoin Fear & Greed Index, considered a benchmark, recently returned to neutral territory (i.e. above 50) for the first time after an extended period in fear and extreme fear territory. . A sustained recovery towards neutral often occurs at the start of the next Bitcoin bull market, such as in early 2019, and then again in mid-2020.
The @CryptoHornHairs Twitter account observed that Bitcoin is almost exactly following the footsteps of a four-year market cycle identified over eight years. After hitting a low last November, Bitcoin could rally for nearly 1,000 more days, the analysis suggests, before entering its next bear market in 2025.
Finally, the findings of another widely followed Bitcoin pricing model are relatively similar. Depending on model Stock-to-Flow, the Bitcoin market cycle is approximately four years, with prices typically bottoming out near the middle of the four-year gap between halvings – the Bitcoin halving is a four-year phenomenon in which Mining rewards are halved, slowing Bitcoin’s inflation rate. Past price history suggests that Bitcoin’s next big price rally will come after the next halving in 2024.
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