Bitcoin miners’ outflows pull bitcoin price below $21K

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Written on Jan 19, 2023

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Bitcoin has pulled back from trading above $21K to $20,703.68 at the time of writing.
Although BTC is down 2.75% today, it is still up by about 14% over the past week.
The main reason for today drop is the surge in Bitcoin miner outflows.

Today’s bitcoin price drop may have caught many by surprise especially since it comes after days of a sustained bullish trend. Bitcoin (BTC) jumped above $21 on January 14 and largely stayed above that level until yesterday night when it slipped below $21k again.

Besides bitcoin, many other cryptocurrencies have been in red today making the global crypto market cap drop by about 3.26% to $961.59B according to data from CoinMarketCap. That said, it is still important to differentiate between the general market drop and the main reason why bitcoin dipped today.

Why Bitcoin is dropping today

The main reason behind today’s bitcoin price drop is the surge in Bitcoin miners’ outflows. An analyst stated in a CryptoQuant post on Wednesday that miners had moved about 669 bitcoin to exchanges, which is quite a significant amount of bitcoins being dumped into the circulation supply.

Mostly, miners take BTC out of their reserves for selling purposes and a spike in the miners’ outflows exerts selling pressure on Bitcoin. Usually, miners use exchanges to quickly swap their bitcoins for altcoins or stablecoins or to simply withdraw as fiat.

The law of demand and supply therefore automatically kicked in resulting in a slight drop in prices following the increased amount of bitcoin in circulation supply.