Miners are Now Turning Bullish

While we wait for Pablo's Third Act to play out, we wanted to shine some light on some fundamentals weighing down Bitcoin's price. In particular, ‘First Spends’. First Spends are a metric that reflects miners spending their fresh Bitcoin. Essentially, once a miner receives their reward – 12.5 Bitcoin - for mining a block, it's stored in their wallet. When the miner moves the fresh Bitcoin out of the wallet it's denoted as a First Spend.

First Spends can be helpful because miners have costs from hardware, electricity, labor, and rent. Making this an indicator for a bearish market. That’s because if miners are selling more Bitcoin than they produce from mining than there is more selling pressure than normal.

The picture below shows what the First Spend versus the amount of Bitcoin generated for time periods spanning one day, one week, 5 weeks, and 12 weeks. For 5 weeks the weekly average amount of First Spends was 537 more Bitcoin than the amount earned from mining. That’s a lot of market overhang. Simply, it means at a price of $7,500 a Bitcoin, there’s over $4 million of excess selling pressure per week over the last five weeks.

Over the last week, that number dropped dramatically, by 478 Bitcoin in fact. About $3,585,000 less selling. This partially explains why we’ve seen price drift upwards over the last week.

What’s even more, in the last 24 hours the ‘Net Inventory’ has turned positive. Meaning the selling pressure has dropped further and miners are actually holding’. This is typical in a runup to a halving event. So it might be an early indicator that the market’s sentiment is shifting.

“But wait… you said that stuff about Pablo”

Yes, regarding Pablo’s Third Act. We’ll get to that soon. For now, just realize mining pressure is subsiding. It was most likely a result of a major mining operation liquidating assets. We know this because taking a look at mining power on Bitcoin’s network there was a major drop about a month ago. Below is the chart. The drop is highlighted in red, which is a time period that coincides with the 5-week window we discussed earlier.

So as the market gears up for the halving, we expect to see this First Spend figure drop as we get closer. If that happens then miners who depend on bitcoin for paying its costs are bullish on prices in the near term. Keep a close eye on this in the weeks to come as we are now within a month of the halving. In the meantime, keep a close eye on our Telegram channel to learn more about Jarvis and some of his insights. In the meantime, we’re on the scent…

Jarvis Labs is the creator of Jarvis, a fully independent artificial intelligence system that tracks on-chain (USDT, BTC, USDC, ETH) movement, exchange flows, market sentiment together with a bulk of other data, then pairs it with the activity of more than 550 wallets to generate tradable signals. To join us in our hunt, stop by our website, check out our Telegram channel. Contact our analyst Ben on Telegram for further details on Jarvis.