Is Bitcoin Price The Key To Mining Stock Success? On-Chain Analysis Captures Real Impact

Bitcoin is trading around $57,500 after a volatile session sparked by the release of CPI data. Amid the market turmoil, CryptoQuant’s on-chain and macro researcher Axel Adler shared an interesting observation about Bitcoin and mining stocks.

According to Adler, there is a strong correlation between the Bitcoin price and the public miners’ stock index, as shown in a CryptoQuant chart. This suggests that any movement in the Bitcoin price can directly impact the value of mining stocks.

With investors placing high expectations on Bitcoin’s performance in the coming months, the price of BTC is likely to play a crucial role in determining the fate of both mining companies and BTC-related stocks. With market sentiment fluctuating, the relationship between Bitcoin and mining stocks remains an important factor for investors to keep an eye on.

Bitcoin miners await a revival

After weeks of extreme fear, volatility, and uncertainty, Bitcoin (BTC) is regaining momentum and investors are increasingly optimistic about future gains. This renewed confidence is particularly strong among Bitcoin miners, especially those associated with public miner stocks, whose performance is closely tied to Bitcoin price movements.

A detailed report from CryptoQuant’s on-chain and macro analyst, Axel Adler, highlights how the growth of mining farms is heavily dependent on Bitcoin price action. This relationship became especially noticeable during the 2021-2022 bull run when both BTC and miner stocks rose in tandem.

While this correlation has generated renewed interest in miner stocks, it has also raised concerns among analysts. Bitcoin price has yet to confirm a clear uptrend or recovery since the market downturn in March, leaving miners in a cautious position.

Miners have responded by gradually reducing their BTC holdings, a sign of caution amid potential price concerns. On-chain data shows that miner balances have been steadily declining since early September.

Data from Glassnode shows that the amount of Bitcoin held by miners has been gradually decreasing since September 2. The total balance held by miners currently stands at around 1.8 million BTC, which is worth around $99 billion at current prices.

If this selling pressure from miners continues, it could have a significant impact on the Bitcoin price in the short term. An increased supply of miners selling their coins often puts downward pressure on the price.

On the other hand, other market factors, such as positive regulatory news or increased institutional adoption, could act as a bullish catalyst for Bitcoin, sending both BTC and miner stocks higher. Ultimately, how these factors play out will determine whether Bitcoin and related stocks can maintain their current momentum or face further challenges in the future.

Bitcoin Price Action Details

Bitcoin (BTC) is currently trading at $58,219 after a volatile day yesterday. The price is up over 10% since September 6 and is now testing a key resistance level.

If this resistance is broken, it could signal further price gains. BTC is just 1.26% away from the 4-hour 200 exponential moving average (EMA) at $58,758, a key technical indicator that has acted as resistance since early August.

A short-term trend change would likely occur if BTC breaks this resistance and successfully tests it as support. For bulls to gain strong momentum, the price needs to breach $60,000, a significant psychological level that is seen as a turning point by many investors.

However, if BTC fails to close above these critical levels in the coming weeks, a deeper correction could follow, with the possibility of lower prices as the next logical scenario in the current market environment.

Main image of Dall-E, chart from TradingView