Bitcoin has rebounded back above $21,000 after falling to an 18-month low as data shows miners have stopped selling and begun accumulating.
The bitcoin miner net position change chart from Glassnode reveals that bitcoin miners have reduced or stopped selling and accumulation has re-started.
The price of the world's preeminent cryptocurrency (BTC-USD) is now $21,141, a rise of 6% in the last 24 hours.
The price of ethereum (ETH-USD), the next biggest cryptocurrency by market cap, has risen to $1,155, up 7% in the last 24 hours.
Throughout May and June, the majority of bitcoin miners were selling off their bitcoin as the price fell and their profit margins dwindled.
Data from Cryptobank.io has shown that for some mining operations the bitcoin price has dropped below the average cost of mining, making their operations unprofitable.
Analysis from Block Research showed that bitcoin mining revenues fell in May by 21.6% and large mining operations sold mined bitcoin to offset costs.
Read more: Crypto live prices
This increases the supply and puts downside pressure on the price of bitcoin.
However, there have been two recent downside exhaustion signals that could be interpreted as a let-up in the bearish movement of bitcoin.
One is that more than 50% of the total supply of bitcoin was bought at a higher price, meaning that these coins are in unrealised loss, this may sound grim, but historically has been a signal of a bottom and a recovery.
Another signal is that bitcoin miners are now accumulating bitcoin and the rush to sell from these operations has slowed or halted.
The latest charts from Glassnode show that large mining operations have slowed down or halted their selling of mined bitcoin.
Bitcoin had another doom-laden weekend with the price plunging below $20,000 on Saturday.
Glassnode data showed there was a colossal $7.3bn in losses this weekend as investors sold bitcoin they had acquired at higher prices.
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The amount of bitcoin in supply that were bought low and are now in profit has fallen below 50%, and when bitcoin touched $17,700 on Saturday, just 49% of the total supply of the cryptocurrency was in profit.
Now there are more bitcoin holders in unrealised loss, meaning they bought at higher levels than today's price.
However, there is a silver lining to this situation as historically bear markets have found a bottom and saw upturns when the supply of bitcoin in profit falls below 50%.
Speaking to Yahoo Finance about this fall below 50% of the percentage supply in profit of bitcoin, Yuya Hasegawa, an analyst at Bitbank, said: "Bitcoin still has a downside potential but if its percentage supply in profit (PSP) goes below 50%, then the price could finally bottom out.
"The price may go sideways in the short term as the market digests the results of the FOMC meeting, but we should still be careful of bitcoin’s downside risks.
"Bitcoin’s target range for the week is $15,000 to $24,000."
Speaking to Yahoo Finance, Marcus Sotiriou, analyst at digital asset broker GlobalBlock said: “Data from Glassnode tells us that when we have previously reached the 40-50% level of supply being in profit, this has sometimes resulted in a bottom being formed, but not always. The important point to note is that every time supply in profit has gone below 50%, a bottoming process has started, where a macro low is printed within 4 months. Based on this historical data, it would be an anomaly if Bitcoin does not establish a bottom within the next 4 months. However, previous bear markets did not endure a rising interest environment coinciding with persistently high inflation, which is important to take into account when analysing previous data around Bitcoin’s price.”
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