Bitcoin price drops sharply 3% after miners’ sales hit a 5-month peak

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The price of Bitcoin (BTC) fell from $ 10,580 to a low of $ 10,258 on Coinbase on Sept. 13. The 3% drop in nine hours comes after on-chain data hinted at a potential miner sell-off.

Miners continue to apply high selling pressure on Bitcoin

Over the past week, on-chain analysts have said that miners have been selling relatively larger amounts of BTC.

Miners are one of two unparalleled sources of selling pressure in the crypto market, aside from exchanges. Consequently, when miners move their mined BTC, it can generate immense selling pressure.

Cointelegraph reported on September 3 on the transfer of BTC funds from major mining pools. Ki Young-Ju, CEO of the analytics firm, said:

“As I know, some Chinese miners are already realizing their mining profitability (return on investment) and may not want new mining competitors to join the industry due to the bull market.”

Meanwhile, according to Glassnode, a metric showing miners’ capital inflow to exchanges just hit a five-month peak. The previous peak was seen in mid-August when the price of BTC reached its 2020 peak of over $ 12,000, which was immediately followed by a correction towards $ 10,000.

Flow of Bitcoin miners to exchanges. Source: Glassnode

Regular liquidations allow miners to cover the costs of maintaining large-scale mining centers. Glassnode said:

“Bitcoin flow from miners to exchanges (1d MA) just hit a 5-month peak of 50,351 BTC The previous 5-month peak of 44,479 BTC was observed on August 14, 2020.”

If BTC rebounds quickly from miner-led pullbacks, it would indicate sufficient demand from retail investors on exchanges. But if the price of BTC continues to fall, it would suggest that there is not enough demand to absorb the selling pressure.

What traders say about BTC in the short term

In the short term, traders are generally cautiously bullish despite BTC’s rejection in the $ 10,500 area.

Traders say that such an important resistance level is unlikely to break on a first try. It is also likely that there was a small pushback to the resistance given its historical importance.

A pseudonymous trader known as “Byzantine General” said that short contract settlements were affected after the initial surge to $ 10,500. In the short term, the trader said he expects a minor bounce or drop to $ 10,100, explaining:

“As usual, liquidity levels are where they are. Liquidations are taken, prices fall. We just took some sales again. I can see this coming back up from here otherwise maybe it will download a bit more at 10100 “.

The price chart of BTC with liquidation levels

The BTC price chart with clearance levels. Source: Byzantine General

Scott Melker, another popular cryptocurrency trader, said that the $ 10,500 region was great resistance for Bitcoin.

Considering the importance of the resistance level, the trader said that it is not likely to result in a major pullback. Melker said:

“Don’t expect a major resistance to break on the first test. Also, don’t expect the first rejection to lead to an epic sale. “

Meanwhile, in his last technical analysis of Bitcoin prices, the trader Michael van de Poppe he also pointed to this level as an important barrier to break in the short term. But for the uptrend to continue, previous resistance levels need to be tested and confirmed as new support before going up, he explains.

“On the positive side, if the price of Bitcoin breaks above the $ 10,450 level, the potential and crucial pivot is structured between $ 10,900-11,000,” adds Van de Poppe.

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