As I’ve emphasized multiple times, miners are the backbone of the Bitcoin network. Every four years, Bitcoin undergoes a halving event, reducing the mining rewards by half. In preparation, miners tend to realize profits by selling Bitcoin to maintain profitability and gear up for the next cycle.
Following each halving, miners may temporarily shut down some mining operations and sell Bitcoin holdings to secure operating funds. When Bitcoin begins setting new all-time highs, they gradually increase sales, positioning themselves for the next downtrend.
The Miner Position Index (MPI) allows us to track these movements. MPI measures the amount of Bitcoin flowing out of miners’ wallets relative to the annual average. A high MPI indicates that miners are withdrawing more Bitcoin than usual. When MPI spikes to extreme levels, forming a peak on the graph, it often signals that Bitcoin’s price may be approaching a cycle top.
Recently, after forming a bottom, MPI has shown a slight increase as Bitcoin reached new all-time highs (see Chart 1). Converting MPI to a 30-day moving average gives clearer cycle signals. In Chart 2, the red circles highlight profit-taking ahead of the halving, which was typically followed by a period of consolidation before a steep price rise. The yellow circles represent profit-taking by miners near the end of a Bitcoin cycle, which was followed by price increases that eventually led into a prolonged downtrend.
Therefore, while the current miner selling may be early positioning for the next cycle, the volume of Bitcoin being sold suggests there is still ample room for further growth in this cycle.
Adding to this, the hashrate and mining difficulty are reaching new highs, showing strong mining participation. This data further supports the case for significant upside potential in Bitcoin’s price (see Charts 3 and 4).
Written by Avocado_onchain
