Miners selling less than they mined precipitated Bitcoin’s latest 10% price drop

posted 3 months ago
A key metric for both Bitcoin's network and miners themselves, called ‘Miner’s Rolling Inventory’ warned of Monday’s 10% price drop. MRI measures the changes in inventory levels. Below 100% in January, suggested a lack of confidence in the 30% price rally. MRI > 100 indicates miners are selling more than they mine, running inventory down, and MRI < 100 means hoarding – that is, miners sell less than they mine, amassing inventory.

Miners must liquidate rewards (bitcoins) to cover operational costs, so a sub-100 MRI indicates fear among miners that the market is too soft to sell into. January’s MRI of 79%, the weakest in over 2 years, indicated a bull trap. Miners generated 54k bitcoins and sent 42k bitcoins to exchanges in January, yielding an MRI of 79%, according to surveillance firm Chainalysis. Miners tend to build inventory during bear markets and run down inventory during bull markets. Miners influence the price of Bitcoin, as mining pools account for the highest % of total Bitcoin flowing into exchanges, with over 25% of all BTC received by exchanges coming from mining pools.
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