Surpassing the $45 Mark with a Remarkable Rise

Bitcoin (BTC) has managed to stay above $41,000 in the early trading hours of January 22, thanks to bullish investors stepping in to prevent a drop below $40,000. However, on-chain signals indicate that the sell-off may not be over yet.

Over the past three days, the price of Bitcoin has been fluctuating between $40,000 and $42,000 as investors try to avoid significant losses if the $40,000 support is lost.

One factor contributing to the struggle for upward momentum in Bitcoin’s price is the selling frenzy among Bitcoin miners. Data from Cryptoquant shows that miners have been rapidly selling off their reserves. On January 16, miners held a total of 1.84 million BTC in their wallets, but just a week later, that number had dropped to 1.83 million BTC, the lowest level since August 2021. The chart below illustrates the significant offloading of approximately 10,000 BTC by miners between January 16 and January 22.

The actions of Bitcoin miners have a substantial impact on the overall crypto ecosystem. They currently control about 9% of the total 19.6 million BTC in circulation. Therefore, if miners continue to sell off their reserves, it could create panic among other stakeholders, including retail investors. Additionally, the coins that have been offloaded in the past week are valued at approximately $4.1 billion at the current BTC price. If market demand remains weak, this intense selling pressure could push the BTC price below $40,000.

Another concerning indicator is the increase in Bitcoin exchange reserves. This data tracks the real-time amount of BTC deposited with cryptocurrency exchanges and trading platforms. According to Cryptoquant, investors deposited 4,000 BTC (worth approximately $164 million) into exchanges between January 16 and January 22. This suggests that investors may be preparing to exit or swap their coins on short notice. The chart below shows the significant increase in BTC reserves deposits in exchange wallets over the weekend, indicating a bearish sentiment among investors.

With more coins available for trading on exchanges, it is likely that Bitcoin will experience another price drop unless there is a major shift in market sentiment.

In summary, Bitcoin miners have continued to reduce their reserves, reaching the lowest level since August 2021. On the other hand, investors have been depositing more BTC into exchange wallets, signaling a bearish outlook. These indicators suggest that Bitcoin’s price could potentially fall below $40,000 in the coming week. However, for the bears to take advantage of the negative momentum, they will need to overcome the initial buy-wall at the $40,700 mark.

If the $40,000 support level does cave, the BTC price could quickly slide towards $38,000. On the upside, if Bitcoin manages to reclaim $45,000, it could invalidate the bearish forecast. However, in that case, the investors who bought at the maximum price of $42,617 could pose significant resistance.