Why Are Bitcoin, Ethereum, and Solana Prices Plummeting? Uncover the Reasons Behind the Crash!
Here’s news on the continuous downtrend affecting major cryptocurrencies like Bitcoin, Ethereum, and Solana. Despite previous rallies, these digital currencies are experiencing relentless pressure. Axel, a crypto researcher, highlights crucial factors contributing to this market slump. Bitcoin, in particular, is under stress from a supply overhang, threatening further declines across the crypto market.
Exchange Inflows and Market Dynamics
Axel’s recent analysis sheds light on the peculiar exchange inflows that triggered Bitcoin’s drop below the $90,000 threshold. This movement suggests that sellers anticipated the decline, leading to a strategic sell-off. The current market conditions hint at ongoing pressure, as the short-term holders’ SOPR (Spent Output Profit Ratio) now acts as resistance, not support. Consequently, the prices of Bitcoin, Ethereum, and Solana may continue to face downward pressure.
Significant BTC Movements and Their Impact
Between January 20 and 21, a notable influx of approximately 17,000 BTC into exchanges coincided with Bitcoin’s fall to around $87,000. This period also saw Ethereum and Solana prices slipping. The analysis indicates these high netflows followed a phase of negative netflow earlier in the month, emphasizing a structural rather than emotional market shift. Although Bitcoin netflow reverted to neutral levels, the remaining supply overhang poses a risk of further price declines.
A potential improvement signal would be a return to negative netflow coupled with rising prices, suggesting the overhang has been cleared. However, with the short-term holders’ 7-day SMA SOPR below 0.996, selling pressure persists as these holders aim to exit at breakeven. A meaningful reversal could occur if the SOPR surpasses 1.0 and maintains this level consistently, filtering out false recovery signals after the selloff.
Challenges to a $100,000 Bitcoin Breakout
In recent research, an on-chain analytics platform highlighted the improbability of Bitcoin surpassing $100,000 soon due to the persistent supply overhang. This overhang continues to be the dominant force hindering short to mid-term rebounds. The Unspent Realized Price Distribution metric reveals the recent rally partially filled a previous air gap between $93,000 and $98,000, driven by redistribution from top buyers to new participants.
However, the unresolved supply overhang is likely to cap efforts above the short-term holders’ cost basis of $98,400 and the critical $100,000 mark. A substantial and sustained increase in demand is essential for a decisive breakout above these levels.
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In summary, while structural factors like the supply overhang continue to pressure Bitcoin, Ethereum, and Solana prices, market participants are closely watching for signs of recovery and potential breakout opportunities. As the crypto landscape evolves, staying informed and adaptable remains crucial for investors navigating this volatile market.
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