Bitcoin flows from miners to exchanges surge 46%, 3 reasons not to panic

The latest on-chain data from July 30 suggests that miners are preparing to sell Bitcoin (BTC). According to data from Glassnode, the amount of Bitcoin flowing from miners to exchanges has increased significantly over the past 24 hours.

Bitcoin miners’ exchange inflows increased by 46.5%. Source: Glassnode

There are three possible reasons why the amount of Bitcoin flowing into exchanges from miners may not affect the price of Bitcoin to a large extent. First, the potential sell-off by miners coincided with the rejection of Bitcoin’s price at $11,400.

Second, while a 46.5% gain may seem noteworthy, it is only $94,000 at the current Bitcoin price. The Bitcoin market reportedly trades $24 billion per day, so the amount is not significant. Third, some market commentators say that Bitcoin's short-term market structure and strengthening fundamentals present a positive outlook.

Bitcoin has been rejected at $11,400

On July 28, the price of Bitcoin peaked at $11,400 across many exchanges. Since then, Bitcoin has fallen to as low as $10,800, a 5% drop.

According to ByteTree data, miners sold about 510 more bitcoins than they mined in the past seven days. In a week, miners produced 6,556 bitcoins and sold 7,060, leaving a net inventory of 1.

Considering that the price of Bitcoin has fallen by 5% in the past 48 hours, it is very likely that the market has already priced in the miners’ selling. If this is the case, then the additional supply is unlikely to affect the BTC/USD price in the short term.

Not much net spending

Furthermore, the net outlay of 500 bitcoins is not high relative to what miners typically spend on net most weeks. Miners may sell more bitcoins to cover expenses, but this could mean lower net outlays in the coming weeks.

Historical data shows that miners often sell most of the bitcoins they mine regularly. For example, a sell order of 500 bitcoins on the exchange market, equivalent to $5 million, is not high or uncommon.

Compelling short-term market structure

Meanwhile, traders see the short-term trend for Bitcoin as bullish as it rebounds from its recent drop, which saw Bitcoin fall to $10,800 before quickly rebounding to over $11,000.

Initially, Bitcoin declined from the $11,200-$11,400 resistance zone. According to recent technical analysis, a rebound towards $11,000 and a strong hourly candlestick chart could change the momentum.

Bitcoin's hourly chart shows a small recovery. Source: Jonny Moe

Bitcoin trader Jonny Moe noted:

“If you find short sellers in a falling wedge, for this hourly candle, you should consider covering your position.”

The market’s appetite for Bitcoin appears to be bullish. Data from Binance Futures indicates that 58% of “top traders” on the platform hold long positions in Bitcoin.

While the market remains dominated by longs, price action has cooled since the start of the week. Funding rates for perpetual futures contracts have fallen. This suggests that the market is less overheated and traders see good market structure in the short term.

Furthermore, despite an increase in exchange inflows from miners, the amount of Bitcoin held on exchanges has fallen to its lowest level since before the summer 2019 bull run. Therefore, a combination of a modest pullback, a neutral futures market, and small miner selling could sustain Bitcoin’s momentum.