Pressure is mounting on the BTC price as Bitcoin miners continue to shrink their reserves. However, this trend may soon reverse, according to a cryptocurrency analyst.
Cryptocurrency miners have drastically reduced their reserves
An analyst from crypto market analysis firm CryptoQuant reported that miners have drastically reduced their reserves since May 5. However, the miner’s net position change turned negative on May 9.
The chart below shows that miners are accumulating Bitcoin heavily from mid-March to mid-April. The ensuing sell-off helped BTC drop from $30,000 to below $27,300 in three days.
This selling pressure has remained roughly consistent to date. Bitcoin slumped to its lowest level in recent months to $26,260 on Friday.
BRC-20 effect
Prior to Bitcoin’s plunge last week, miners were having a lucrative day with new demand surrounding Ordinals and BRC-20 tokens, which brought NFTs and tokenization to Bitcoin.
This phenomenon has also increased Bitcoin’s fees as well as Ethereum’s. BTC transaction fees hit $30 on May 8. These fees went directly into the pockets of the miners. It provided a huge bonus in addition to the 6.25 BTC they usually earn per block.
The miners’ net position briefly turned positive during the BRC-20 trending days. But it has quickly turned negative since wages returned to normal. Fortunately for the bulls, CryptoQuant has reason to believe that the sale will end soon.
Analyst BaroVirtual said, “Currently, miner net position values are in the region where Bitcoin has bounced in previous times and the local uptrend has continued. In this context, it can be assumed that once Bitcoin reaches its $24,000 target, miners will be able to significantly reduce their pressure, i.e. slow down or cancel sales.”
“Bitcoin will be under pressure until it regains this level”
Technically speaking, BTC price has bounced back from the oversold level and is showing an upward trend. However, according to another crypto analyst Stockmoney Lizards, the descending resistance line at $28,500 will remain bearish until it is broken.
At the same time, another cryptocurrency analyst, CryptoYoddha, points out that a “classic ABCD” chart pattern is forming and that BTC needs to “recover the middle of the range for the uptrend to continue.” He highlights the critical resistance at $28,500 for BTC on CryptoYoddha.
Also, on-chain analyst Ali Martinez stated that Bitcoin is facing stiff resistance between $28,180-$28,990. This was a region where 1.24 million addresses bought 973,220 BTC. On the other hand, it sees the most important support level at $26,490. According to Martinez, “failure to hold above this level will trigger a harder correction towards $24,100 or $23,190.”
Throughout the article, we have discussed Bitcoin’s miner and demand region in terms of on-chain. cryptocoin.com As we have reported, technical analysts reveal their targets of $ 40,000 for the short term.
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