Why Massive Bitcoin Miner Outflow Has This Top Quant Analyst “Scared”
Bitcoin price is still hanging onto $18,000 and is only a couple of grand shy of finally taking out $20,000 and beginning the new bull market. But BTC miners that should be holding in advance of mark up, are suddenly moving massive quantities of the cryptocurrency, and it has a top industry quantitative analyst “scared” of the potential implications.
Here’s why the outflows could be so frightening in the short-term, but also how they could be bullish in the long-term.
Is The Bullish Bitcoin Narrative Of 2020 Beginning To Fade
There is little left to put hope behind in the world today, with a pandemic going on, economic uncertainty, and political and social unrest at a boiling point. But in the midst of all the doom and gloom, Bitcoin has is potentially becoming the Phoenix that rises from the ashes of disaster and destruction and creates a new era free of government control.
Society is and has long been under the grip of the government through monetary policy. Taxes are the obvious ways the State takes money from the people, but the addition of central banks allowed them to do it sneakily through inflation.
Related Reading | “Massive” Wave Of OTC Buying Could Be Behind Bitcoin Bull Impulse
The debt the government buys and the money they print is paid for by the price of the rising dollar. Bitcoin was created to do away with this, and that narrative has never been more clear than in 2020.
The safe haven, inflation hedge, and digital gold narratives have taken off and brought in smart money for the first time. But why then, based on what we know about past Bitcoin market cycles, are miners moving – and potentially selling – so much BTC ahead of what could be the largest price appreciation phase the asset has seen yet?
Whatever is causing it, the sizable increase in miner BTC outflows has the industry’s top quant analyst “scared.”
This makes me scared
— Ki Young Ju 주기영 (@ki_young_ju) December 10, 2020
Why Miners Moving BTC En Masse Has An Analyst Scared But Could Be Bullish For Crypto
The situation is scary because the Bitcoin could be sold into the market while the cryptocurrency is currently on the ropes from repeating rejections from resistance at $20,000.
A new all-time high was set, and even with all the FOMO in crypto, and a year of mostly positive momentum, miners are instead potentially dumping their holdings.
Why would miners sell now when this is what is supposed to happen next? | Source: BTCUSD on TradingView.com
Making this trend even more confusing, is the fact that the hash ribbons, the cryptocurrency’s most profitable buy signal, just triggered. The tool is theoretically used to tell when miners will be holding BTC for the long haul. Yet BTC is moving en masse.
In an update, Crypto Quant CEO Ki Young Ju, says that only a small portion of the BTC made it to Binance, while the rest of it was moved to an unknown wallet. The wallet is thought to potentially have been moved for the purpose of an OTC deal, where Bitcoin is sold through backdoor agreements in bulk, at slightly below cost.
Whales and institutions use such methods in order to avoid drastically impacting prices, and miners could be moving some of their stores for this purpose behind the scenes as to not tank Bitcoin price.
Related Reading | “Most Profitable Buy Signal” Triggers As Bitcoin Consolidates Below ATH
In this scenario, more whales taking sizable positions in the cryptocurrency could be bullish. But there are of course bearish implications as well, such as the larger portion held in the unknown BTC wallet could just be a stopgap until it too makes its way to an exchange, and is market sold onto FOMOing buyers at prices near all-time high.
Only time will tell which of the scenarios it is.
Featured image from Deposit Photos, Charts from TradingView.com