The Miners' Position Index (MPI) is an indicator that measures the ratio of the number of all miners' outflows in USD to the 365-day moving average of those outflows. It is inspired by the Puell Multiple. The MPI provides insights into the behavior of miners, specifically their selling activity, and can be used to gauge the overall sentiment of the market. By examining the value itself, a high MPI value indicates that miners are sending their coins to exchanges more than usual, which is considered bearish for the market. I have found that the Miner's Position Index (MPI) is a powerful tool for understanding the behavior of Bitcoin miners and their potential impact on the cryptocurrency market. Upon examining historical data, it becomes evident that when the MPI index reaches high values, such as 10, which has only occurred 5 times since 2011, it has been followed by a small correction in price before a potential continuation of price appreciation, followed by a significant price correction averaging around -30%. This analysis sheds light on the significance of MPI in predicting market corrections and its potential implications for investors. One possible explanation for this phenomenon is that when the MPI index reaches high levels, it suggests that miners are actively selling their coins, leading to increased selling pressure in the market. This can indicate a transfer of Bitcoin from miners to long-term holders who are looking to purchase and store Bitcoin in cold wallets for the long run. Economically, the increased supply of coins from miners' outflows may outweigh the demand from buyers, leading to a decrease in price. However, historical data has shown that price appreciation often follows the MPI flashing values above 10, indicating significant demand arising from long-term holders' accumulation. The price may bottom at 25 000-27 000, followed by an important appreciation to 42 000-45 000 and then experience a subsequent correction back to 32 30k.
Written by onchained
