Dogecoin Miners In Accumulation Mode, But Is This Really Bullish?

On-chain data shows the Dogecoin miners have been accumulating recently. Here’s what this could mean for the memecoin, based on past pattern.

In a new insight post, the on-chain analytics firm Santiment has talked about the role of the miners in the different cryptocurrency markets like Bitcoin and Dogecoin. The indicator of interest here is the “Supply held by Miners,” which, as its name suggests, keeps track of the total amount of tokens that the miners of a network as a whole are carrying in their balance.

When the value of this indicator goes up, it means the miners are receiving net deposits into their wallets right now. Such a trend implies this cohort may be in a phase of accumulation. On the other hand, the metric registering a decline suggests these chain validators are withdrawing a net number of tokens from their balance, potentially for selling purposes.

First, here is a chart that shows the trend in the Supply held by Miners for Bitcoin over the past year:

As is visible in the above graph, the Supply held by Miners and the Bitcoin price has shown some correlation during the past year. As Santiment has explained in the post:

When miners choose to hold onto their coins rather than selling, it’s often a sign that they expect prices to rise, which can create positive momentum in the market. However, when they start offloading large amounts, it can put downward pressure on prices.

Most recently, the BTC Supply held by Miners has been on the rise again after plunging to relatively low levels earlier. Thus, it would appear that these chain validators may be accumulating once more, which can be bullish for the asset.

The relationship that miners show to the BTC price is similar to many other cryptocurrency networks. However, that is not the case with meme coins like Dogecoin.

According to the analytics firm:

If it’s a very speculative-driven asset, you can often pick up an inverse indication between what miners are doing and where the altcoin is going price-wise compared to Bitcoin.

The inverse relationship is visible in the below chart for the Dogecoin Supply held by Miners.

From the graph, it’s apparent that the Dogecoin Supply held by Miners had plunged back in January, but what followed this selloff from the miners was a sharp surge in the DOGE/BTC ratio.

Over the last couple of months, the chain validators of the asset have seen their supply register a rapid increase. Given the inverse relationship the metric and the price tend to follow, however, this accumulation could be a bearish sign for the asset.

Dogecoin had made recovery beyond the $0.107 mark earlier, but the memecoin has since gone downhill as it’s back at $0.100.