In a Tweet published on Thursday, crypto analyst @ColeGarnerBTC provided a chart from market analytics firm Glassnode showing the inverse correlation that exists between miner outflows and the Bitcoin price. In this case, the flows are making their way directly to exchanges:

Source: Twitter

Based on the chart above, periods of peak transfers from miners to exchanges act as a leading indicator for BTC price action. In other words, miners are offloading their stash and creating local tops in the process.

More often than not, the periods are immediately followed by a significant decline. Conversely, a massive plunge in miner outflows (as seen on the right of the chart) triggers a rally in the Bitcoin price.

Miners Bunkering Down for the Long-Term?

From the beginning of May, miner-exchange volume has plummeted to levels not seen since August of 2019. If the pattern holds, then Bitcoin could be in for another rally.

The data may not be that easy to interpret, however. Inefficient market participants have been offloading their BTC in recent weeks. As previously reported on BeInCrypto, miners sold more Bitcoin last week than they generated.

Source: Twitter

The shakeout of weaker hands could lead to more exits from the network, given the 50% block subsidy slash occasioned by the May halving event. Indeed, Bitcoin’s difficulty adjustment plunged 9.29% today, the second-largest decrease in 2020.

Miners Expand Operations in a Difficult Environment

Despite the difficult outlook, major players are still expanding their operations with additional hardware. U.S.-based Riot Blockchain recently announced the purchase of 1,000 S19 Pro miners from Bitmain.

The new acquisition brings Riot’s 2020 total to 3,040 rigs, which the company hopes will take its hashingHashing is creating a sequence of characters (a hash) using a mathematical function. This sequence of characters is extremely secure… More potential to a staggering 567 PH/s.

Riot joins other rivals in the North American Bitcoin mining scene pursuing operational expansion with next-generation hardware. On Wednesday, BeInCrypto reported that Marathon acquired 700 Bitcoin miners, while competitor Bitfarms also purchased some 1,847 MicroBT mining rigs.

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As a leading organization in blockchain and fintech news, BeInCrypto always makes every effort to adhere to a strict set of editorial policies and practice the highest level of journalistic standards. That being said, we always encourage and urge readers to conduct their own research in relation to any claims made in this article. This article is intended as news or presented for informational purposes only. The topic of the article and information provided could potentially impact the value of a digital asset or cryptocurrency but is never intended to do so. Likewise, the content of the article and information provided within is not intended to, and does not, present sufficient information for the purposes of making a financial decision or investment. This article is explicitly not intended to be financial advice, is not financial advice, and should not be construed as financial advice. The content and information provided in this article were not prepared by a certified financial professional. All readers should always conduct their own due diligence with a certified financial professional before making any investment decisions. The author of this article may, at the time of its writing, hold any amount of Bitcoin, cryptocurrency, other digital currency, or financial instruments — including but not limited to any that appear in the contents of this article.