The Struggle Toward $40K In Bitcoin Prices Is Still Ongoing

The Bitcoin price is currently wavering around the $40,000 mark, exhibiting uncertainty, but both on-chain and technical data indicate early indications of a potential recovery.

Source: coinmarketcap.com

Bitcoin has experienced a 20% decline since the introduction of spot Bitcoin exchange-traded funds (ETFs) in the United States, with its value dropping to $38,000 on January 23. Despite this pullback, Bitcoin whales have seized the opportunity to buy the dip, signaling bullish efforts to reclaim the $40,000 threshold. Analyzing data from TradingView, it is observed that Bitcoin briefly surged to $40,000 on January 25. However, the intraday price action suggests that maintaining this level will pose a challenge. Despite the current uncertainty, several factors are instilling optimism among traders regarding a potential recovery in the Bitcoin price, aiming to surpass the $40,000 mark.

Calming GBTC Reverses The Recent Uptrend In Optimism

Following the launch of Bitcoin ETFs, traders have struggled to generate sufficient momentum to overcome the selling pressure. This lack of momentum is attributed to significant outflows from the Grayscale Bitcoin Trust (GBTC), possibly indicating that investors are opting for Bitcoin ETFs with lower fees. However, there is a notable development as the outflow of funds from GBTC has decreased for two consecutive days. 

This decline in outflows suggests a reduction in selling pressure from long-trapped investors who were previously unable to redeem their GBTC shareholdings. Bloomberg senior ETF analyst Eric Balchunas observed this downward trend in GBTC outflows, noting that while outflows from other ETFs have slowed down, net flows remain substantial at $824 million. As the outflows from GBTC diminish, there is potential for Bitcoin to experience an upward movement from its current levels.

On-Chain Information Reveals Whales of Bitcoin Purchasing Dips

In the current market correction, data provided by blockchain data and intelligence firm Glassnode indicates noteworthy activity among Bitcoin whales. Despite the recent volatility in the market, these significant investors are actively increasing their holdings of BTC. The data focuses on entities possessing 1,000 BTC or more, revealing an increase from 1,481 entities on January 11, coinciding with the commencement of spot BTC ETF trading, to 1,533 entities on January 25. This represents a 3% rise in the number of entities accumulating Bitcoin. The behavior of these Bitcoin whales suggests that they anticipate the BTC price to surpass its 2024 high of $49,000.

Additionally, Glassnode's data highlights substantial bid liquidity just below the spot price, reaching levels not seen in the past three years. Co-founder Keith Alan explained in a dedicated video that significant liquidity in proximity to the price tends to either prompt price reversion or consolidation, emphasizing its impact on recent market dynamics.

Disclaimer: FameEX makes no representations on the accuracy or suitability of any official statements made by the exchange regarding the data in this area or any related financial advice.