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With the current political unrest in Europe and the inverted yield curve, it is indeed difficult to define the short-term trend of Bitcoin. o, there could be volatility in the price action associated with the impending crisis. Meanwhile, the Miners Position Index (MPI) has surged recently, indicating the possibility of selling pressure from miners.
MPI started to rise as selling pressure from miners
The main factor affecting the MPI is the total amount of coins sent from the affiliated miners’ wallets, as the MPI is equal to the ratio of total miner outflows (USD) to its one-year moving average of total miner outflows (USD) . In particular, the approximation of 6,800 BTC transferred out of F2Pool currently corresponds to the catalyst.
Selling pressure from F2Pool exit
However, the “total costs” the sum of all fees paid to coin miners remains quite low as the hash rate has increased since the July 2021 low. This means that despite the low fees received by miners, the mining process has been competitive.
Miners engage in mining
One of the common facets of on-chain analysis is looking at whether trades are actively executed through exchanges or OTC (over-the-counter) bureaus. As the following image shows, the number of incoming transactions on exchanges is relatively low, which means that sellers are not interested in trading their Bitcoin on exchanges.
Exchange incoming trades count downtrend
In the meantime, the fund flow ratio the ratio of coin transfers involving the exchange to all network-wide coin transfers remains low, while the total token transferred across the network is volatile. Therefore, there could be a lot of OTC deals in speculation. This is a good sign as some might buy BTC corresponding to the recent drop in Bitcoin price.
Low fund flow ratio and huge transferred tokens
Moreover, the number of active addresses of recipients is relatively larger than that of senders, indicating the possibility of more individual addresses buying Bitcoin.
The number of active sending and receiving addresses has increased and more recipients than senders
Additionally, the number of active addresses has been on the rise since the end of July 2021. Applying Metcalf’s law, where the value of a communication network is proportional to the square of the number of its users – the current intrinsic value of Bitcoin increases in terms of decentralization because it is proportional to the square of the number of active addresses. This can be seen as a good sign in the long run as Bitcoin has gained public interest.
The total number of active BTC addresses has been on the rise since July 2021
Therefore, the Bitcoin network is growing steadily, even though there is some political and economic uncertainty.
Dang Quan Vuong is a trader and market analyst at King Stock Capital Management and on-chain analyst at CryptoQuant and Santiment Vietnam.
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Disclaimer: Opinions expressed on The Daily Hodl are not investment advice. Investors should do their due diligence before making high-risk investments in Bitcoin, cryptocurrency or digital assets. Please note that your transfers and transactions are at your own risk and any loss you may incur is your responsibility. The Daily Hodl does not recommend the buying or selling of cryptocurrencies or digital assets, nor is The Daily Hodl an investment adviser. Please note that The Daily Hodl engages in affiliate marketing.
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