Bitcoin’s Test of All-Time Highs Means Old Miners Are Cashing Out

Miners appear to have just sold long-dormant bitcoin, sourced from old block rewards, right when BTC plunged from its record high on Tuesday.

Given the market’s thin liquidity, it could have had an outsized impact on bitcoin’s price.

Bitcoin’s rapid price ascent during the last month, which culminated in a new all-time high and quick reversal on Tuesday, has meant that some early miners have started selling their old block rewards – putting pressure on bitcoin’s price.

On-chain data spotted by CryptoQuant shows that, just before bitcoin peaked at new highs around $69,000 and then plunged to $62,000 on Tuesday, 1,000 bitcoin worth roughly $69 million were moved to Coinbase by addresses more than a decade old and that the research firm says are linked to miners. (Shifting long-dormant tokens to Coinbase, a large crypto exchange, can be a prelude to selling.)

“Considering that the exchange order book shows 5-10 bitcoins of liquidity for every $100 price change, a sell-off of 1,000 bitcoins is highly likely to trigger a significant price drop,” Bradley Park, an analyst at CryptoQuant, told CoinDesk in an interview. “Especially when traders are waiting to enter a short against bitcoin’s all-time high like on Tuesday.”

Park said that the recent influx of bitcoin into exchanges reminds him of the sharp increase in BTC inflows that occurred before the 40% price drop on March 12, 2020, as Covid-19 began to rapidly escalate in severity, causing governments around the world to begin lockdowns, forcing a flight to safety for traders.

When that sell-off finally ended, bitcoin had bottomed out at $3,850.

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