More and more, Bitcoin is leaving centralized exchanges.

A general market correction for cryptocurrencies has characterized the last week. During this time, Bitcoin holders (mainly whales) have been moving Bitcoin from exchanges to private wallets. Although there have been some inflows to exchanges as well, the outflow has been more frequent.

Data from Santiment indicates that 25,878 BTC have been moved off exchanges in the last 24 hours alone. This is the largest exchange outflow difference recorded in the previous five weeks, suggesting that a progressive increase in Bitcoin outflows is being witnessed on the network, but what does this mean for the digital asset and those holding or trading it?

? 25,878 #Bitcoin were moved off of exchanges in the past 24 hours, the largest difference between outflow & inflow in 5 weeks. Historically, large quantities of $BTC moving off exchanges leads to price rises given a few days for the pattern to hold. ? https://t.co/wZ4Q8LZsxn pic.twitter.com/UCWp7G5WuZ

— Santiment (@santimentfeed) April 14, 2022

Outflow spikes lead to price rises.

The good thing about Bitcoin is that it leaves patterns for those interested to read, understand, and predict price behaviors in the future. In the past, BTC outflow from exchanges usually led to price rises. This is shown in the chart below, where two outflow spikes led to 24% and 26% price increases, respectively.

Santiment’s data suggests that this may be the case this time as well, provided that the pattern holds for the next few days. If that is the case, we should expect the asset’s price to rise significantly in the coming days despite the current stagnation seen at around $40,000. The only requirement now is for the pattern to be sustained, which cannot be guaranteed as investors decide the market’s direction with their actions.

How Bitcoin is faring

Bitcoin has not experienced any significant volatility since the correction on 11 April. After dropping below $40,000, a brief relief rally took the price to $41,000 again, but it has not been able to grow past that. 

At the moment, “Things aren’t looking good for Bitcoin, but bears can’t celebrate until a weekly close below $37,600,” analyst Nebraskangooner tweeted, as the daily chart shows a close with a bearish engulfing candle. However, if the weekly candle closes above $37,600, the analyst says Bitcoin may bounce from here.

The falling Bitcoin hash price may force weaker miners to unplug.

Weak Bitcoin (BTC) miners are staring at an uncertain future. That’s according to Dylan LeClair, the senior analyst at UTXOmgmt. 

Senior Analyst Mr. LeClair suggested that the miners had to contend with dropping hash prices in a Twitter post. That’s happening at a time when the BTC hash rate is increasing following the consolidation of its prices.

Image source: Twitter

The hash price is the ratio of the miner’s income over the hashing rate. Higher hashing prices denote increased profitability for the miners. That, in turn, incentivizes them to continue mining. 

What Next for Weak Miners?

LeClair holds that the situation may cause weak miners to unplug. Alternatively, they may have to migrate to more efficient energy options. Migration would be a last-ditch effort to bring mining costs to profitable levels.

Again LeClair avers that the BTC hash rate is at its highest now. He attributes this rise to the market correcting itself post the Chinese crypto crackdown. 

That crackdown saw the BTC hash rate drop significantly as Chinese concerns switched off their operations. But many are coming back to life after setting up in crypto-friendly regions. Their re-entry into the mining space has seen the fortunes of small players in particular dwindle.

Crypto-Twitter’s Reaction

Leclair’s comments drew swift reactions from crypto Twitter. A Twitter user Hodlpants isn’t enthused by the development. He holds that that’s a trend BTC lovers wouldn’t want to see in the long term as it disincentivizes miners from securing the network.

On the other hand, another user Evo sees it as a positive development. He argued that the weaker miners would seek renewable energy sources. The BTC industry is fighting perceptions that it is environmentally unfriendly. Thus such a move would be one way of endearing itself to the crypto’s opposers.

One other user, N8DOGE, fears BTC’s decentralization stance. He opines that if the miners fail to find alternative cheap energy sources, they’ll remain unplugged. That would then lead to a higher degree of miner centralization.

BTC’s Hash Price Has Been Declining

According to Glassnode’s data, BTC mining price has been declining consistently. That’s because the king crypto’s mining difficulty has also progressively increased.

Increases in the hashing rate favor bigger miners over smaller ones. That’s because they can deploy faster and better-equipped mining rigs. Thus they can maintain their level of profitability. The reverse is true for small-scale miners.