Miners sell Bitcoin inventory. What does the continuous rise of the MRI index indicate?

According to the data website Byte Tree, miners have sold more coins in stock than newly mined coins for several consecutive days since March 24. This indicates that Bitcoin has rebounded to its peak since the plunge on March 11, and miners have sold their unused Bitcoin stocks to recover funds and are pessimistic about future price trends.

According to Digital Assets Date, the MRI index (Miner's Rolling Inventory) was greater than 100 within 12 days of the bitcoin price rising from $3,800 to $7,000. The MRI value is based on the first spend of bitcoins (miner's 1st spend) in the same period of time and the amount of newly mined bitcoins (generation) multiplied by 100. The time period is usually 3 to 6 weeks. A value greater than 100 means that miners sold more first spend bitcoins than newly mined bitcoins. A value less than 100 is the opposite.

For example, over a six-week period, these miners generated (mined) 76,963 new bitcoins, while first spends saw 78,342 bitcoins added to the network. Therefore, 2% more bitcoins were “spent” than mined. Bitcoin’s six-week MRI run rate at this point is 102%.

Unspent inventory and first spend

When miners mine a block, they get a block reward. These are newly minted bitcoins that have never been used (transactions sent). Before they are used, they are unused inventory, which we can simply call inventory. When they are first spent, they appear in the form of first consumption. Every time they are spent in the future, they become general spending or transaction value.

As of early 2020, there are 1.5 million bitcoins left in stock out of the 16.6 million bitcoins mined. Most of them were mined in 2009 and 2010.

On March 13, 2011, the Bitcoin inventory peaked at 2,593,051. The price of Bitcoin had been rising rapidly from 2009 to 2010 because it was easy to mine Bitcoins and there wasn't much to do with Bitcoin at the time. But as adoption and interest grew, so did the demand for Bitcoin. These miners then sold these Bitcoins to new buyers, and in the process they had to transfer these Bitcoins through the blockchain, meaning that these Bitcoins have now been spent. Since the peak nine years ago, the Bitcoin inventory has fallen by more than a million Bitcoins. Since the peak of Bitcoin inventory in 2011, 12.5 million Bitcoins have been mined, and 13.5 million new Bitcoins have been added to the network since then.

The impact of MRI (Miner's Rolling Inventory) value on price

The MRI index is closely related to the price. Many people think that when the MRI index is large, the price will fall, and vice versa, when the MRI index is small, the price will rise. This seems logical, but in fact, it is the opposite. In fact, when the price falls, miners will think that the price is too low and will not sell, which will naturally not lead to a market crash. When the price rebounded from 3800 to 7000 recently, miners thought that the price would rebound to a high point in the short term and chose to sell the coins in their hands. This is why the MRI index has been greater than 100 after the recent sharp drop and rebound.

Why do miners choose to sell a large amount of inventory on hand (what causes MRI to be too high continuously)

• After the price plummets, the mining cost is higher than the income, and the coins are sold into legal currency to recover the cost.

• The sharp drop in US stocks led to a drop in Bitcoin. After a brief rebound, the Dow Jones Index turned around and continued to fall on Friday

• The number of people infected with COVID-19 in the United States has increased significantly. The U.S. economy will decline in the future. People choose to sell gold and Bitcoin to hold cash.

• The market is bearish on the future of Bitcoin and chooses to sell in advance when it rebounds. Most people believe that the reward halving will not bring about an increase, and even the halving market has already been consumed in advance.

Summarize

In the Bitcoin trading market, miners are usually very shrewd and very sensitive to prices. In order to maximize their profits, they usually predict price trends in advance to some extent and make corresponding selling behaviors. The recent MRI index fully illustrates the miners' pessimistic attitude towards future price trends. With the general decline of US stocks and the continued increase in the number of COVID-19 infections in the United States, it indicates that the future will be worse. The Bitcoin halving market has been consumed in advance, and there is no evidence that it will rise sharply in the future. William Coin Circle reminds everyone to be cautious in bottom-fishing at present.