On-chain data shows that the bitcoin Miners Position Index (MPI) has recently formed a death cross, a sign that the asset’s rally may end.
bitcoin MPI Has Formed a Bearish Cross Recently
As noted by an analyst at CryptoQuant Quicktake mail, the btc MPI 365-day moving average (MA) has recently surpassed the 90-day. The “IPM” here refers to an indicator that measures the relationship between miners’ outputs and the annual MA.
“Miner outputs” are the amounts these chain validators transfer from their combined wallets. Generally, miners dump their coins for selling purposes, so miners’ outputs can measure how much dumping they are currently engaging in.
However, miner departures are not usually that unusual, as this cohort has to constantly sell what they mine to pay their running costs, such as electricity bills. What may be notable is if your sales deviate from the norm.
The IPM provides us with information about precisely this, as it compares the outputs with their 365-day MA. When the metric is greater than 0, miners are selling more than last year’s average, while negative values imply the opposite.
Now, here is a chart showing the trend in the 90-day and 365-day MAs of bitcoin MPI over the past few years:
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/10/Bitcoin-MPI-forms-a-death-cross-end-of-the-rally.png" alt="bitcoin MPI” width=”1280″ height=”546″ loading=”lazy” data-recalc-dims=”1″/>
The two MAs of the metric appear to have crossed the path of each other in recent days | Source: CryptoQuant
The chart above shows that the 90-day MPI MA bitcoin (colored orange) has declined over the past few weeks. Recently, the metric crossed below the 365-day MA, consolidating sideways.
Historically, the crossovers of the two MAs of the btc MPI have seemed to be important for the price of the cryptocurrency. On the chart, the quant has highlighted the major crossovers that occurred over the past few years.
Whenever the indicator’s 90-day MA has observed a crossover above the 365-day MA, btc has witnessed bullish momentum. This crossover preceded the April 2019 rally, the 2021 bull run, and the rally that began in January.
On the other hand, the opposite type of crossover has proven to be bearish for the asset’s value, as sharp declines have followed. Since this death cross has recently re-formed for bitcoin, it may indicate that this year’s rally has come to an end.
However, the crossover is still in the process of forming, meaning the next few weeks could be important. If the 90-day moving average can change quickly, then the death cross may not form, but if the metrics continue on their current trajectory, the bearish signal would solidify.
btc Price
Regardless of the death cross, bitcoin has seen strong bullish momentum over the past 24 hours as the asset has risen to the $28,300 level.
<img decoding="async" class="alignnone size-medium aligncenter" src="https://technicalterrence.com/wp-content/uploads/2023/10/Bitcoin-MPI-forms-a-death-cross-end-of-the-rally" alt="bitcoin price chart” width=”1534″ height=”877″ loading=”lazy”/>
btc has registered a sharp jump in the past day | Source: BTCUSD on TradingView
Featured image from Shutterstock.com, Charts from TradingView.com, CryptoQuant.com
