Bitcoin (BTC) Miners and the Market Are Experiencing a Resurgence of Confidence

The Bitcoin [BTC] investment landscape is experiencing a resurgence of confidence despite struggling to stay above $60,000. This is evidence in retail activity, as well as in Bitcoin miners.

Bitcoin [BTC] investors are showing renewed confidence despite the cryptocurrency’s failure to stay above $60,000. This is evident in both retail activity and the actions of Bitcoin miners.

After struggling to stay in the green throughout the month, Bitcoin and the broader crypto market are finally seeing a recovery in sentiment. The fear and greed index currently stands at 26, having peaked at 30 during Tuesday’s session.

Bitcoin sentiment, as signaled by the fear and greed index. Source: Alternative.me

The fear and greed index suggests that Bitcoin sentiment is higher now than it was at the beginning of the year. However, this may not be entirely indicative of confidence considering that the index slipped to 26 over the last 24 hours.

This could be due to the fact that BTC slipped below $60,000 once again, an occurrence that has become common recently. In this instance, however, the sell pressure on Bitcoin might have been triggered by news that Mt. GOX just moved over 12,000 BTC, valued at over $700 million.

Are miners HODLing their Bitcoin?

Bitcoin miner reserves have been on a general downtrend over the last 12 months. This reflects the state of sell pressure, as miners’ reserves have been largely dictated by whether bears or bulls are the dominant force in the market.

However, miner reserve data showed an inversion in the curve so far this month from its lows in July, suggesting that the number of miners HODLing their BTC has been increasing.

Bitcoin miner reserves over the last 12 months. Source: Cryptoquant

Demand for Bitcoin in the derivatives segment is also recovering, as indicated by the rising open interest after a rough start to the month. In turn, we also observed a resurgence in appetite for leverage.

Bitcoin open interest and leverage demand. Source: CryptoQuant

Despite the resurgence in open interest and leverage, the market is still showing signs of caution. Recent liquidations have put many traders on edge, especially given the prevailing directional uncertainty.

While the current market conditions suggest an improvement in the level of market confidence, Bitcoin remains exposed to certain and emerging risks- Mt. Gox induced sell pressure being one of them.

However, there is another risk that is less pronounced- BTC dominance has been declining since 10 August.

Bitcoin dominance on the 4-hour chart. Source: TradingView

A small retracement is to be expected considering that Bitcoin’s dominance saw a strong rally from 13 July. Nonetheless, this could be the beginning of a larger downtrend to come.

If so, then liquidity may begin flowing in favor of the altcoins, which would limit BTC’s potential upside.

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