Bitcoin suffered a 3% price drop on Wednesday, coinciding with the largest flow of BTC from miners to exchanges in more than a year.
BTC flows from miners to exchanges
That's according to data from blockchain analysts at Glassnode, which showed a massive 2,650 BTC transfer that went from Bitcoin miners to the Bitfinex exchange on Tuesday. Seen below, that equates to the largest transfer of BTC from miners to exchanges since March 26, 2019.
Based on Tuesday's price, the 2,650 BTC inflow totaled just under $ 25 million in dollar terms. Soon after, Bitcoin experienced a sharp short drop from $ 9,764 to $ 9,381, which occurred in five hours early on Wednesday morning.
Among Bitfinex's USD, USDT, GBP, JPY, and EUR pairs, Bitcoin transfers accounted for just under 60% of total trading volume on Wednesday, according to CoinMarketCap.
Does the price of Bitcoin increase after the trade dump?
Despite the fear and uncertainty that generally accompanies any large movement of coins from miners to exchanges, there may still be a silver lining at stake.
The last time such a large volume of BTC went from miners to exchanges, the price of Bitcoin reacted with a 226% rise. This took place between March and June 2019 when the price of Bitcoin rose from $ 3,985 to $ 13,003.
Similarly, if we go back to 2017, we see the same thing happening again. Seen below, a large transfer of BTC to the exchanges in September 2017 was followed by a price increase that took Bitcoin from $ 3,701 to its all-time high of $ 20,089. That equaled a 441% increase.
According to the data of Bitinfocharts, Bitcoin's mining profitability is still 45% lower than it was before the recent block reward reduction to halving. With that in mind, it would be easy to assume that the movement of coins from miners to exchanges could be a sign of mining capitulation.
However, the historical data points seen above suggest that there could be a price increase just around the corner.