Bitcoin price crashes 3% after miners’ Bitcoin outflow hits 5-month high

The price of Bitcoin (BTC) fell from $10,580 to a low of $10,258 on Coinbase on Sunday, September 13. The drop was 3% in nine hours, and on-chain data suggests that Bitcoin may have been sold off by some miners.

Miners continue to exert high selling pressure on Bitcoin

Over the past week, on-chain analysts said that large miners and mining pools have been selling relatively large amounts of Bitcoin.

Miners and mining pools are one of the two unrivaled sources of selling pressure in the cryptocurrency market, aside from exchanges. So when miners start moving their mined Bitcoin, it can create a huge amount of selling pressure.

Cointelegraph reported on the transfer of Bitcoin funds from major miners on September 13. Ki Young-Ju, CEO of the analytics firm, said:

“From what I understand, some large miners have begun to realize the potential profitability (ROI) of mining, and since the bull run is showing signs, they may be less eager for new mining competitors to join the industry.”

Meanwhile, according to data service Glassnode, an indicator showing the inflow of funds from miners and mining pools to exchanges has just reached a five-month high. The previous surge occurred in mid-August, when the price of Bitcoin reached its 2020 high of $12,000, followed by a wave of decline that corrected the price of Bitcoin to $10,000.

Bitcoin miner communication traffic. Source: Glassnode

Regular sales of Bitcoin allow miners to afford the costs of maintaining large mining farms. Glassnode data shows:

“Bitcoin flows from miners to exchanges (daily average) just hit a five-month high of 50.351 BTC on September 14th, with the previous five-month high of 44.479 BTC observed on August 14th, 2020.

If Bitcoin quickly recovers from the miners' selling, it would indicate that there is sufficient demand for trading funds from retail investors. However, if the price of Bitcoin continues to fall, it would indicate that there is not enough demand to absorb the selling pressure.

What traders think of Bitcoin in the short term

In the short term, traders remain cautiously optimistic despite Bitcoin’s sell-off in the $10,500 area.

Traders say such a major resistance level is unlikely to be breached on the first attempt to move upward. Considering its historical importance and criticality as support, a minor rejection for bulls is entirely possible.

BTC price chart with liquidated positions