Bitcoin (BTC) Price at Risk of Drawdown, Ominous On-Chain Data Emerges

Bitcoin (BTC) price may breach the key support level at $42,000, as current on-chain data shows miners are giving up their assets in a relatively unwholesome way.

After initially flashing signs of recovery, Bitcoin’s price and market capitalization both skidded backward, dropping 1.31% in the past 24 hours to $42,285.19 and $830,514,189,967.

The panic selling has helped prop up the trading volume which has jumped by 59.80% in 24 hours to $22,531,240,745.

The ongoing selloffs are no longer a shock to traders, as Bitcoin failed to move in the expected manner despite the approval and subsequent launch of spot Bitcoin Exchange Traded Fund (ETF) products in the United States. This ongoing dump, however, has a driving force, the miners.

Bitcoin Miner Influence on Price

Bitcoin miners play an important role in the network as the billions of dollars changing hands are validated by these entities for which they earn a reward. According to top market analyst, Ali Martinez, these miners are likely selling off their holdings.

He noted that the Bitcoin Miners’ Position Index (MPI) is currently at a high point of 9.43, showcasing a usual-than-normal movement that hints at a potential selloff.

According to Martinez, the latest selloff might signal that the worst is past, but further miner’s selloffs are possible and this should guide further engagement in the market.

Additional insights from IntoTheBlock revealed that Bitcoin is sitting at a crucial threshold where 2.68 million addresses acquired over 1 million BTC at an average price of $43,400.

The bottleneck predicted by IntoTheBlock is that some buyers may keep selling until they reach their break-even point, a situation that will further cause resistance in Bitcoin’s bid to chart a recovery course.

With Bitcoin dropping below $43k, it sits just below a significant on-chain level. 2.68m addresses acquired over 1 million BTC at an average price of 43.4k. Uncertainty can cause these holders to sell into their break-even point, increasing resistance in a move up. pic.twitter.com/Kw8ysF7AcX

— IntoTheBlock (@intotheblock) January 15, 2024

Is There Hope for Recovery?

Bitcoin typically weathers the toughest of storms to reposition itself. After falling to a low of $16,600 following the elongation of the collapse brought by the bankruptcy of FTX, Bitcoin soon soared back to a high of $48,969.37 over the past year.

The emergence of spot Bitcoin ETF products will also make a difference in the price of the asset in the long term as predicted by many analysts in the industry. Based on these historical trends, the chances Bitcoin will bounce back from current lows is high.

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