Key Points
- Bitcoin miners sold over 110,000 BTC in a week, raising concerns about a potential stall in price rally.
- Increased miner sell-offs in the past have often marked local and cycle tops, signaling an overheated market.
Bitcoin [BTC] miners have been selling off their holdings at an accelerated rate, particularly as the price of BTC crossed the $90K mark. From the 10th to the 17th of November, over 110K BTC, amounting to nearly $10 billion, were sold by miners.
The highest daily sell-off occurred on the 12th of November, with 25,367 BTC (worth $2.2B) being sold. This trend of increased miner sell-off has been observed since October, coinciding with a broader market recovery.
Impact of Miner Sell-Off
This intensified selling pressure is raising doubts about BTC’s ability to cross the $100K psychological target. Historically, increased miner sell-offs and revenue have often marked local and cycle tops. If the current trend continues, it could trigger other holders to sell as well.
Decoding BTC’s Cycle Top
From the perspective of miners, a spike in miner fees above 30% of total revenue has typically correlated with past BTC cycle tops. This indicates elevated euphoria in BTC markets, driving transaction fees to record highs against rewards.
In November, miner fees hovered around 10% of total revenue, suggesting the market was not overheated yet. Another indicator, the Pi Cycle Top, showed little room for a rally for BTC before the market became overheated.
Interestingly, targets between $100K-$120K were expected by large players in the options market. QCP Capital, one of the world’s largest crypto options trading desks, recently noted, “In view of Bitcoin’s impressive rally since the US election, our view is that $100,000 – $120,000 may not be too far off.”
A strong move above $120K could trigger the Pi Cycle Top and increase profit booking across all cohorts of BTC holders. This would require a 30% move from the $90K level at press time.