Are Bitcoin Miners Fueling Consolidation Before Breakout Above $100K?

Bitcoin’s upward momentum remains relentless, surpassing $98,000 and consistently achieving new all-time highs over the past 11 days

Despite this, signs indicate a potential short-term pause as the market enters consolidation. A key factor influencing this shift stems from Bitcoin miners, who sold over 3,000 BTC within 48 hours, amounting to roughly $273 million. This action even suggests a possible short-term pullback.

Source: Brave New Coin Bitcoin Liquid Index

On November 18, analyst Ali Martinez highlighted the notable sell-off by Bitcoin miners, a common occurrence during bull markets. Typically, miners, regarded as long-term holders, take profits during rapid price increases. As these miners cash out, the increased market supply often triggers cooling periods or price corrections.

Source: ali_charts

While sell-offs like this are common during market cycles, they do not necessarily signal bearish trends. Instead, they indicate the market might be entering a phase of consolidation. This allows the market to absorb recent gains, test support levels, and solidify a stronger foundation for future growth. Bitcoin’s ability to maintain its price above $98,000 despite this added supply reflects continued market confidence.

Source: CryptoQuant

Bitcoin’s Strong Network Health Amid Sell-Off

Bitcoin’s Strong Miners have been selling some Bitcoin, but the network’s fundamentals remain robust. The Bitcoin hashrate, a key indicator of network security and competition, continues to break new records. This growth suggests that miners still believe in Bitcoin’s long-term potential, despite short-term sell-offs. Stronger network security is crucial for cryptocurrency stability, and the current surge supports Bitcoin’s positive future outlook.

Source: CryptoQuant

Although miners have sold some holdings, Bitcoin’s network health and upward momentum persist. Recent price gains, pushing Bitcoin to record highs, reflect growing market interest and investor confidence. The current consolidation phase is a necessary adjustment, allowing the market to process rapid growth and prepare for future movements.

Consolidation around the $98,000 mark follows an impressive rally. This phase allows the market to stabilize, filter out weaker positions, and build a foundation for future price movements. Support levels between $88,000 and $90,000 will be crucial in determining the next market direction. These levels will indicate whether a deeper correction is underway or if the market is gearing up for further growth.

If Bitcoin maintains support at these levels, the likelihood of a breakout above $100,000 increases. This pause might be essential for stabilization before another price surge. Historically, after periods of consolidation, Bitcoin has shown resilience and often reached new all-time highs. Despite some short-term pressure, the overall market sentiment remains positive.

Will Bitcoin Rally Again After Golden Cross?

Amid consolidation, another factor is driving optimism. On November 18, CryptoQuant, an on-chain analytics platform, identified a rare “golden cross” in Bitcoin’s Puell Multiple, a key indicator of mining profitability. This metric measures the daily value of mined Bitcoin against its 365-day moving average. 

Historically, significant price surges have followed when the metric rises above the moving average. CryptoQuant pointed out that, in the past five years, the Puell Multiple has crossed the 365-day moving average only three times, each triggering substantial Bitcoin price increases.

“It is a crucial indicator for evaluating mining profitability,” said CryptoQuant contributor Burakkesmeci.

For instance, when the Puell Multiple crossed the moving average in March 2019, Bitcoin rallied by 83%. In January 2020, a similar event triggered a 113% surge, and in January 2024, the metric again signaled a 76% return. The data points to a historical average price increase of around 90% following such golden crosses, adding weight to the argument that a major rally could be imminent.

Source: CryptoQuant

CryptoQuant also noted that favorable macroeconomic conditions play a crucial role in boosting the chances of a breakout. With the current market environment, including low interest rates and growing institutional interest in Bitcoin, the conditions seem ripe for another strong bull run. As the Puell Multiple continues to rise, the likelihood of Bitcoin seeing another major price surge increases.