According to this metric, it’s a good time to buy BTC right now
2 min read
As the analyst pointed out to CryptoQuant, Bitcoin Miner Position Index may indicate that miners are unable to estimate the peak. BTC Miner Position Index (MPI) is a BTC metric that is defined as the ratio of total miners outflow divided by a 365-day moving average. The inspiration for this metric is Puel’s multiple.
MPI = total outflow of miners / total runoff of miners (365-day MA)
BTC MPI shows miners disposal behavior compared to the historical average. However, the indicator creates one important assumption. It is assumed that most of these miners’ outflows are in fact transferred to exchanges for sale.
Good time to buy BTC
Some investors like to use this metric to find out when to sell Bitcoins. The following graph shows the MPI trend compared to the price of the last few bullish trends:
The graph above reveals two functions of the indicator. The first is that during the bullish trends of 2013, 2017 and 2021 the miners sold their coins before the final peak. The second is that the yellow arrows in the graph seem to be suitable periods for purchase more Bitcoin. Historically, the price increased when the indicator showed such values.
Now let’s look at another graph, this time for Bitcoin Miners Reserve. This metric shows the number of coins that miners hold in their wallets.
The miners’ reserve sank before ATH 2021, which meant that they got rid of the coins before the top. The value of the indicator now seems to be rising, which means that miners are currently re-accumulating.
In conclusion, therefore, miners are not very good traders because they always get rid of coins prematurely. Another thing that MPI may suggest is that now is the right time to buy BTC, because the values are currently in the yellow zone.
Images: Cryptoquant
