The Bitcoin MPI indicator, which is based on data from the blockchain, has seen a significant rise in recent months and currently stands at the same level as March 2021. This could indicate that there may be a bull rally.
After months of inactivity, Bitcoin MPI seems to be catching up with some uptrend
As explained by an analyst in a CryptoQuant post, the BTC MPI metric’s current trend may suggest that a bull rally could occur soon, if historical pattern is anything to go by.
The “Miners’ Position Index” (or the MPI in short) is an indicator that’s defined as the ratio of the number of all Bitcoin miners’ outflows divided by the 365-day moving average of the same.
The metric measures how miners are selling right now in comparison to what they did over the last year.
This indicator is worth more if it rises. It means that miners are buying more BTC lately. On the other hand, the index’s value going down implies miners are turning less active as they are moving around a lower amount of coins.
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Here’s a chart showing the BTC MPI trend over the last few years.
Source: CryptoQuant| Source: CryptoQuant
The graph above shows that the quant marked 3 important areas of Bitcoin MPI trend since 2018.
It looks like, in each of these regions the index made a U-shaped curve where the metric’s value fell as the bull period ended and rose as a new rally approached.
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Since many months, the BTC MPI is in the middle region (bear), of such curves. But now, it looks like the indicator’s value is catching an uptrend again, and has now reached the same values as observed back in March of last year.
The current trend formation could be leading to a bull rally if the historical pattern holds true.
BTC price
At the time of writing, Bitcoin’s price floats around $38.8k, up 0.5% in the last seven days. In the last month, crypto lost 8%.
The chart below shows how the currency’s price has changed over the course of five days.
Source: BTCUSD on TradingView| Source: BTCUSD on TradingView
Since the sharp move up and down almost a week ago, there hasn’t been any significant volatility in the price of Bitcoin.
Unsplash.com featured image, Charts from TradingView.com and CryptoQuant.com charts