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Contrary to popular belief, a new study seems to conclude that Bitcoin miners command just but a tiny percentage of all BTC selling power to influence price and that there is no meaningful correlation between outflows to exchanges and prices.

Role of Bitcoin Miners

For their role, Bitcoin miners keep the network secure and because of their heavy investment, successful miners are rightly incentivized for funneling their hash power. For every block that is mined, the successful mining pool gets 12.5 BTCs, or roughly $90,625 at current spot rates and transaction fees associated with that block. This is a lucrative business that has been inevitably industrialized.

Per Satoshi’s design, the number of coins rewarded will continue to drop until all 21 million coins are mined. Thereafter, participating miners will only earn transaction fees. The question in everyone’s mine is whether BTC’s prices will be high enough to attract miners seeking profits.

And understandably, like in all Proof of Work systems, mining coins demand electricity and investing in the latest efficient gear for profitability. Even if electricity costs are low and deployed gear is the up-to-date but prices are suppressed, mining would be futile, and therefore unattractive.

Since Bitcoin supply is inelastic and regardless of hash rate-demand, only a preset amount of BTCs will be released into the ecosystem within a given period, it is imperative that prices remain high enough for processes to be sustained.

MSV: Impact of Miner Liquidation on Price is Low

Miners, being sensitive to price, were earlier blamed for liquidating their coinbases–every after 100 confirmed blocks, and subsequently driving prices lower. But now, it has been discovered that their liquidation impact on BTC price is too low, near negligible, according to Miner’s Share of (on-chain) Volume (MSV). The MSV relates on-chain volumes and mining output, and how the former diminishes over time.

This study is quite startling, and although the authors have a clear disclosure explaining that their data samples may not be representative and the “analysis probably accounted for 1–5% of all actual miner outflows,” their effort to dive deeper and reveal the lack of positive correlation—and therefore causation, between BTC outflows and price returns may be highly probable, even conclusive.

“After (1st-order) differencing the series, and checking for stationarity, we sought after meaningful relationships between any of the mapped pools’ moves and bitcoin’s prices. The correlation coefficient for both series studied reveals no meaningful relationship with price returns. A p-value of 0.062 indicates a ~94% probability that the very slightly negative correlation is not a product of chance.”

In November, it was widely reported that weak miners were beginning to capitulate following the temporary dip below $7,000. BTC has since recovered, steadying at $7,250.


Study: The Selling Power of Bitcoin (BTC) Miners is Tiny

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Study: The Selling Power of Bitcoin (BTC) Miners is Tiny


Contrary to popular belief, a new study seems to conclude that Bitcoin miners command just but a tiny percentage of all BTC selling power to influence price


Dalmas Ngetich

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Coingape is committed to following the highest standards of journalism, and therefore, it abides by a strict editorial policy. While CoinGape takes all the measures to ensure that the facts presented in its news articles are accurate.

The views, opinions, positions or strategies expressed by the authors and those providing comments are theirs alone, and do not necessarily reflect the views, opinions, positions or strategies of CoinGape. Do your market research before investing in cryptocurrencies. The author or publication does not hold any responsibility for your personal financial loss.

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Dalmas Ngetich , 2019-12-03 15:33:20 ,

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NewsBlock © 2019 - 2020 All rights reserved.

NewsBlock © 2019 - 2020. All rights reserved.

While Bitcoin’s price seemingly moves without rhyme or reason — collapsing by dozens of percent and embarking on face-melting rallies on a whim — the cryptocurrency market is filled to the brim with fractals.

Related Reading: Analyst: Bitcoin Price Likely to Fall to Low-$8,000s as Chart Remains Weak

A brief aside: A fractal, in the context of technical analysis and financial markets anyway, is when an asset’s price action is seen during a different time. This form of analysis isn’t that popular, but it has proven to be somewhat valuable in analyzing Bitcoin.

One recent fractal popularized by a well-known cryptocurrency trader is implying that BTC is going to return to the low-$7,000s in the coming days.

Bitcoin Fractal Implies Retracement to Low-$7,000s

A well-known crypto trader going by “Tyler Durden” on Twitter recently posted the chart below, which shows that a Bitcoin price fractal may be playing out. The fractal has four phases: horizontal consolidation marked by one fakeout, a surge above the consolidation phase, a distribution, then a strong drop to fresh lows.

If the fractal plays out in full, BTC could reach the low-$7,000s again, potentially as low as $7,100. This would represent a 20-odd percent collapse from the current price point of $8,800.

It isn’t only a fractal that is hinting Bitcoin has the potential to visit its lows. As we reported on Saturday, Bloomberg believes that if the GTI Vera Convergence Divergence Indicator flips red, a downtrend could push the cryptocurrency back to $7,300.

Related Reading: Stephen Colbert Pokes Fun at Bitcoin in Monologue: Mainstream Gone Wrong?

Can Bulls Step In?

But again, many believe it is irrational to have such bearish interpretations of the cryptocurrency’s chart at the moment. As reported by NewsBTC earlier, Popular crypto trader Mayne recently noted that the “people waiting for $6,000” are irrational. He quipped that Bitcoin retracing and consolidating after its fourth-biggest bull move in history ($7,300 to $10,500, a 42% gain) is perfectly par for the course, but noted that it’s totally possible we can go lower from $8,800.

The medium-term technicals support this.

Trader and CoinTelegraph contributor FilbFilb found that by the end of November or start of December, the 50-week and 100-week moving averages will see a “golden cross,” which he claims is far more significant” for the Bitcoin market that other technical crosses.

Also, a Bitcoin price model created using Facebook Prophet machine learning found that the leading cryptocurrency is likely to end the year at just over $12,000. What’s notable about this model is that it called the price drop to $8,000 months in advance, and forecasted a ~$7,500 price bottom for BTC.

To put a cherry on the cryptocurrency cake, Crypto Thies observed that when Bitcoin bottomed at $7,300, it bounced decisively off the 0.618 Fibonacci Retracement of the move from $3,000 to $14,000, which correlates with the two-week volume-weighted moving average. He added that summer 2019’s consolidation was marked by Bitcoin flipping major resistances into support levels, implying that a bullish reversal and subsequent continuation is likely possible in the coming weeks.

Featured Image from Shutterstock

Nick Chong , 2019-11-10 12:00:38

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