First Mover: Bitcoin Miners Are Again Stacking Coins in a Positive Sign for the Market

Everything you need to make sense of the crypto markets and beyond

By the CoinDesk Markets Team

Edited by Lawrence Lewitinn, Managing Editor, Global Capital Markets

April 9, 2021

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Market Moves

by Omkar Godbole

Bitcoin Miners Are Again Stacking Coins in a Positive Sign for the Market

Blockchain data shows bitcoin (BTC) miners are accumulating coins and adding to bullish pressures in the market for the first time since December.

Analytics firm Glassnode’s miner position change metric, which gauges the 30-day change in the supply held in the miners’ addresses, recently turned positive in a sign of renewed holding by those responsible for making coins.

The balance held in miner wallets has increased by 4,435 BTC to 1.806 million over the past two weeks, Glassnode’s data shows.

“Miners [now] have a net accumulation of liquid assets as they have enough cash in reserve to run their future operations, having liquidated holdings when the Bitcoin price was between $20,000 and $40,000, or most of them are holding in anticipation of a price rally,” Flex Yang, CEO of Hong Kong-based Babel Finance, said in an email.

Miners predominantly operate on cash and liquidate holdings to meet expenses. However, the pace of miner selling varies from time to time depending on mining-specific factors and bitcoin’s price expectations.

Bitcoin miner net position change (Source: Glassnode)

The return to accumulation mode observed since March 31 comes after almost four months of largely negative readings – miners decreasing positions and taking profits. Peak distribution of roughly 17,000 BTC to 24,000 BTC was seen throughout January, Glassnode’s weekly newsletter dated March 8 said.

While miner flows constitute a small part of the total network volume, as tweeted by Glassnode’s CEO Rafael Schultze-Kraft, accumulation by miners is analogous to increased promoter holding of corporate stock and is considered a positive indicator. “Their spending patterns provide insight into the sentiment of some of the biggest bulls in the Bitcoin market,” Glassnode said in a newsletter published on April 5.

Whales, or large investors with the ability to influence prices, have also stopped selling coins.

The number of whale entities – clusters of crypto wallet addresses held by a single network participant holding at least 1,000 bitcoin – has steadied above 2,000 since March 31.

Bitcoin: number of whale entities (Source: Glassnode)

The figure dropped from 2,230 to 2,004 in nearly two months to March 31, mainly due to quarter-end rebalancing, according to blockchain analyst Willy Woo. It remains to be seen if these positive on-chain developments fuel the next leg higher in the cryptocurrency.

Bitcoin's daily chart (Source: TradingView)

While bitcoin is currently trading moderately higher on the day near $58,500, it remains trapped in a narrowing price range. A breakout would mark a continuation of the broader uptrend typically experienced in the seasonally strong month of April.

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Technician's Take

by Damanick Dantes

No ‘Stimmy’ Rally: Why the $1,400 Checks Brought So Little Bitcoin Stimulus

U.S. cryptocurrency exchanges say they’ve begun to see an uptick in customers buying bitcoin (BTC) or other digital tokens with their $1,400 stimulus checks from President Joe Biden’s latest coronavirus-relief and economic recovery plan.

But in the bitcoin market, the episode has proven to be a disappointment to some traders who were speculating last month that a new wave of demand might help push prices to fresh highs.

Biden signed the $1.9 trillion COVID-19 relief bill into law on March 11. Soon afterward, some cryptocurrency traders began to speculate whether some of that money might be used to buy bitcoin. Mizuho Securities, a Japanese brokerage firm, estimated that $40 billion of stimulus checks could be spent on bitcoin and stocks, according to a survey published on March 15.

As recently as late last month, no cryptocurrency exchanges reported any major bump in $1,400 purchases, based on an informal survey by CoinDesk. Industry executives cautioned that it might be too early to judge.

Now, those purchases do appear to be happening, according to some firms, even if they’re not the tsunami that some bitcoin bulls might have expected.

Kraken, a San Francisco-based exchange, has seen an “uptick that may well stem from U.S. stimulus checks,” according to Thomas Perfumo, the company’s head of business operations and strategy.

But the rise in $1,400 “stimmy” deposits hasn’t been enough to bid up bitcoin.

Over the past month, BTC has struggled to decisively break above $60,000 amid slugglish trading activity. Slowing volume is typical of a consolidation phase in price action, diverging from the BTC price uptrend seen earlier in the year.

Chart shows BTC spot volume at its lowest point year-to-date. But there was little sign of a bitcoin stimulus (Source: Skew)

Retail accounts make up about 80% of deposits on Bitstamp. The company experienced growth in retail deposits under $2,000 over the past month when U.S. stimulus checks were issued, Hunter Merghart, head of U.S. operations at Bitstamp, told CoinDesk during a phone interview.

Robinhood, an online brokerage app, said Thursday that 9.5 million customers traded cryptocurrencies during the first three months of the year, up from 1.7 million in the fourth quarter of 2020.

There just wasn’t much of a bitcoin stimulus.

“I wasn’t expecting stimmies to pump bitcoin,” said Mati Greenspan, founder of Quantum Economics. “There are much bigger players in the market now.”

Original story found here:

No ‘Stimmy’ Rally: Why the $1,400 Checks Brought So Little Bitcoin Stimulus

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Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.

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