Bitcoin [BTC] has shown little movement recently, trading in a narrow range of $93,000 to $94,000. This lack of volatility may suggest market stability, but it also hints at uncertainty regarding future price direction.
Over the last 24 hours, Bitcoin’s price dipped slightly by 0.75%. Despite this, trading volume surged by 68.66% to $29.41 billion, indicating a possible increase in selling pressure.
CryptoCrypto conducted an analysis of the overall market sentiment to determine the potential for heightened selling pressure.
Decline in Network Activity: Impact on BTC’s Fate
Bitcoin has experienced a notable decrease in network activity recently, marked by a steady decline in the number of active addresses.
Presently, active addresses have plummeted to 667,100, the lowest level observed since November 2024.
A drop in active addresses implies reduced engagement with the Bitcoin network, possibly signaling decreased transaction volume. This decline in activity could suggest waning interest, potentially leading to a drop in price.
Conversely, it could also indicate that the remaining active addresses hold a significant portion of the BTC supply. If these addresses exhibit increased buying activity, it might trigger a price surge.
Impediment to Future Price Surge
Should active addresses ramp up BTC buying activity, the asset may encounter a crucial supply zone as it moves higher, as per data from IntoTheBlock.
IntoTheBlock’s “In/Out of the Money Around Price” metric, which identifies supply and demand thresholds, indicates that BTC could face selling pressure between $95,900 and $98,600.
Within this range, roughly 1.46 million addresses have potential sell orders for a total of 1.29 million BTC.
Breaking through this supply zone could propel BTC back to the $100,000 area. However, failure to surpass it may lead to a drop below $90,000, signaling further downside potential.
Growing Supply Casts Doubt on BTC’s Rally
According to CryptoQuant, BTC exchange reserves have been steadily increasing, indicating a rise in available BTC on exchanges and, consequently, an uptick in supply.
Since January 8th, BTC reserves on exchanges have climbed from around 2,354,000 to 2,360,000. Typically, a rise in exchange reserves serves as a red flag that the asset might encounter additional downward pressure from its current price.
A continued increase in exchange reserves could impede BTC’s ability to rally from its current levels.